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Market standards in financial contracting: The Euro’s effect on debt securities

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  • Engert, Andreas
  • Hornuf, Lars

Abstract

The introduction of the Euro ushered in a rise to dominance of English contract law in European debt securities. Corporate issuers in the Euro zone chose English law significantly more often than a control group from other European countries. The Euro effect on choice of law is particularly strong for debt securities in local markets that, arguably, were most affected by the Euro. The Euro effect is not explained by differences in the suitability of English law compared to other laws, a change in issuer composition or debt securities types, and the greater market share of British and American underwriters. We argue that increased standardization benefits (network effects) from a boost in cross-border investment provide the best account of why English law conquered the European debt securities market.

Suggested Citation

  • Engert, Andreas & Hornuf, Lars, 2018. "Market standards in financial contracting: The Euro’s effect on debt securities," Journal of International Money and Finance, Elsevier, vol. 85(C), pages 145-162.
    • Handle: RePEc:eee:jimfin:v:85:y:2018:i:c:p:145-162
    DOI: 10.1016/j.jimonfin.2018.03.017
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    More about this item

    Keywords

    Financial contracting; Standardization; Network effects; Debt securities; Economic and monetary union;
    All these keywords.

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • K12 - Law and Economics - - Basic Areas of Law - - - Contract Law

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