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Financial Market Integration Under EMU

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The single most important policy-induced innovation in the international financial system since the collapse of the Bretton-Woods regime is the institution of the European Monetary Union. This paper provides an account of how the process of financial integration has promoted financial development in the euro area. It starts by defining financial integration and how to measure it, analyzes the barriers that can prevent it and the effects of their removal on financial markets, and assesses whether the euro area has actually become more integrated. It then explores to which extent these changes in financial markets have influenced the performance of the euro-area economy, that is, its growth and investment, as well as its ability to adjust to shocks and to allow risk-sharing. The paper concludes analyzing further steps that are required to consolidate financial integration and enhance the future stability of financial markets.

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Paper provided by Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy in its series CSEF Working Papers with number 197.

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Date of creation: 28 Apr 2008
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Publication status: published in The Euro - The First Decade, edited by Marco Buti, Servaas Deroose, Vitor Gaspar and João Nogueira Martins. Cambridge: Cambridge University Press, pp. 315-353
Handle: RePEc:sef:csefwp:197

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Cited by:
  1. Schmitz, Birgit & von Hagen, Jürgen, 2011. "Current account imbalances and financial integration in the euro area," Journal of International Money and Finance, Elsevier, vol. 30(8), pages 1676-1695.
  2. Pels, 2010. "International Asset Holdings and the Euro," The Institute for International Integration Studies Discussion Paper Series iiisdp331, IIIS.
  3. Stavarek, Daniel & Repkova, Iveta & Gajdosova, Katarina, 2011. "Theory of financial integration and achievements in the European Union," MPRA Paper 34393, University Library of Munich, Germany.
  4. Bertola, Giuseppe, 2008. "Labour Markets in EMU - What has Changed and What Needs to Change," CEPR Discussion Papers 7049, C.E.P.R. Discussion Papers.
  5. Daniel Pérez & Vicente Salas-Fumás & Jesús Saurina, 2005. "Banking integration in Europe," Banco de España Working Papers 0519, Banco de España.
  6. Mariani, Fabio & Padoan, Pierre Carlo, 2003. "The Growth-Finance Nexus and European Integration: A Macroeconomic Perspective," EIFC - Technology and Finance Working Papers 23, United Nations University, Institute for New Technologies.
  7. Stephan Siegel & Christian Lundblad & Campbell R. Harvey & Geert Bekaert, 2011. "The European Union, the Euro, and Equity Market Integration," 2011 Meeting Papers 468, Society for Economic Dynamics.
  8. Klaus Regling & Servaas Deroose & Reinhard Felke & Paul Kutos, 2010. "The Euro After Its First Decade : Weathering the Financial Storm and Enlarging the Euro Area," Governance Working Papers 22817, East Asian Bureau of Economic Research.
  9. Mark M. Spiegel, 2004. "Monetary and financial integration: evidence from the EMU," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue Aug 6.
  10. Claudia M. Buch & Christian Pierdzioch, 2003. "The Integration of Imperfect Financial Markets: Implications for Business Cycle Volatility," Kiel Working Papers 1161, Kiel Institute for the World Economy.
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  12. Gajewski, Krzysztof & Olszewski, Krzysztof & Pawłowska, Małgorzata & Rogowski, Wojciech & Tchorek, Grzegorz & Zięba, Jolanta, 2012. "Integracja finansowa w Europie po wprowadzeniu euro. Przegląd literatury
    [Financial integration in Europe after the introduction of the euro. A literature overview]    ," MPRA Paper 42482, University Library of Munich, Germany.
  13. Mark M. Spiegel, 2008. "Monetary and financial integration in the EMU: Push or pull?," Working Paper Series 2008-11, Federal Reserve Bank of San Francisco.
  14. Regling, Klaus & Deroose, Servaas & Felke, Reinhard & Kutos, Paul, 2010. "The Euro After Its First Decade: Weathering the Financial Storm and Enlarging the Euro Area," ADBI Working Papers 205, Asian Development Bank Institute.
  15. Philip R. Lane, 2008. "EMU and Financial Integration," The Institute for International Integration Studies Discussion Paper Series iiisdp272, IIIS.
  16. Elias Papaioannou & Richard Portes, 2008. "The international role of the euro: a status report," European Economy - Economic Papers 317, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
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