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Monetary Union, institutions and financial market integration: Italy, 1862-1905

  • Toniolo, Gianni
  • Conte, Leandro
  • Vecchi, Giovanni

The Paper draws its motivation from the observation that, three years into the single currency, EMU financial markets are making only slow progress towards integration and from the belief that economic history can offer useful insight as to the causes of the phenomenon. In this vein, we investigate a previous case of financial market integration in the wake of monetary unification, that of Italy after 1862. We find that the prices of the Rendita Italiana 5% (Italian Consols) across regional stock exchanges did not fully converge until 1887, twenty five years after the creation of a ‘monetary union’ in the peninsula. Regression analysis shows that variables such as the spread of ICT, trade volumes and the diffusion of the ‘single currency’ fail to explain the delay in financial market unification. We argue that markets remained relatively fragmented because local vested interests resisted the legal and regulatory changes needed to make arbitrage across individual stock exchanges efficient. A single Italian financial market appeared only when the State imposed more uniform financial market legislation nationwide, a fact that the EU should perhaps not overlook.

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Article provided by Elsevier in its journal Explorations in Economic History.

Volume (Year): 40 (2003)
Issue (Month): 4 (October)
Pages: 443-461

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Handle: RePEc:eee:exehis:v:40:y:2003:i:4:p:443-461
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622830

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  1. Goldberg, Pinelopi Koujianou & Verboven, Frank, 1998. "The Evolution of Price Dispersion in the European Car Market," CEPR Discussion Papers 2029, C.E.P.R. Discussion Papers.
  2. George J. Stigler, 1961. "The Economics of Information," Journal of Political Economy, University of Chicago Press, vol. 69, pages 213.
  3. Giuseppe Tattara & or consequences), 2002. "Paper Money but a Gold Debt. Italy in the Gold Standard," Economic History 0205002, EconWPA.
  4. Bruce E. Hansen, 2001. "The New Econometrics of Structural Change: Dating Breaks in U.S. Labour Productivity," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 117-128, Fall.
  5. David Jacks, 2000. "Market integration in the North and Baltic Seas, 1500-1800," Economic History Working Papers 22383, London School of Economics and Political Science, Department of Economic History.
  6. repec:cup:cbooks:9780521443159 is not listed on IDEAS
  7. Collins, William J., 1999. "Labor Mobility, Market Integration, and Wage Convergence in Late 19th Century India," Explorations in Economic History, Elsevier, vol. 36(3), pages 246-277, July.
  8. Joshua L. Rosenbloom, 1994. "Was There a National Labor Market at the End of the Nineteenth Century? Intercity and Interregional Variation in Male Earnings in Manufacturing," NBER Historical Working Papers 0061, National Bureau of Economic Research, Inc.
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