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The Internationalization of Austria's Financial Sector since Accession to the European Union

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  • Matthias Fuchs

    () (Oesterreichische Nationalbank)

Abstract

Since the mid-1990s, Austria and many other industrialized countries have experienced massive growth in their external asset and liability positions. However, Austria's high degree of real economic integration due to its position as a small, open economy only partly explains this development. Autonomous financial transactions, effected independently of external trade financing from a profit motive, are increasingly determining cross-border movements of capital. Legal measures adopted in the run-up to Austria's accession to the EU (e.g. the full liberalization of the Austrian financial sector) favored this development, as did the country's participation in Economic and Monetary Union (EMU). In terms of the rate of internationalization, Austria has as high a degree of financial integration as Finland and Sweden. However, it lags well behind Switzerland or the Netherlands in this respect. In terms of GDP, foreign equity holdings are on a far smaller scale in Austria than in these countries. Austrian securities investors prefer foreign debt investments. The euro area is Austria's most important investment and financing region — especially for securities. In the 10-year observation period, Austria's net income from foreign investments is in line with the European average.

Suggested Citation

  • Matthias Fuchs, 2005. "The Internationalization of Austria's Financial Sector since Accession to the European Union," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 2, pages 130-143.
  • Handle: RePEc:onb:oenbmp:y:2005:i:2:b:9
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    File URL: https://www.oenb.at/dam/jcr:527c6dad-d163-40e0-b81d-7f0dcc7ad5a5/mop_e_02_05_analyses9_tcm16-30248.pdf
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    References listed on IDEAS

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    1. Karen K. Lewis, 1999. "Trying to Explain Home Bias in Equities and Consumption," Journal of Economic Literature, American Economic Association, vol. 37(2), pages 571-608, June.
    2. Obstfeld,Maurice & Taylor,Alan M., 2005. "Global Capital Markets," Cambridge Books, Cambridge University Press, number 9780521671798, August.
    3. Gian Maria Milesi-Ferretti, & Philip R. Lane, 2003. "International Financial Integration," The Institute for International Integration Studies Discussion Paper Series iiisdp03, IIIS.
    4. Jan J.G. Lemmen, 1998. "Integrating Financial Markets in the European Union," Books, Edward Elgar Publishing, number 1399, December.
    5. Lane, Philip R. & Milesi-Ferretti, Gian Maria, 2004. "Financial globalization and exchange rates," LSE Research Online Documents on Economics 19926, London School of Economics and Political Science, LSE Library.
    6. Lieven Baele & Annalisa Ferrando & Peter Hördahl & Elizaveta Krylova & Cyril Monnet, 2004. "Measuring financial integration in the euro area," Occasional Paper Series 14, European Central Bank.
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    Keywords

    Financial Sector; Austria; Internationalization;

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