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Empirical estimates of the impact of the euro on the corporate bond market in the euro area

  • Gabe de Bondt
  • Jung-Duk Lichtenberger

Empirical estimates of an error-correction model, nested in a partial adjustment framework, show that the euro had a temporary impact, via mergers and acquisitions activity, on corporate bond issuance in the euro area. In addition, a permanent effect is found for corporate bonds issued by non-monetary financial corporations. For the first five years of the single currency, these effects are estimated to have been up to 2� and around 5� percentage points, respectively, of the annual bond market growth. Other significant determinants of corporate bond issuance are economic activity, the cost of bond issuance relative to other sources of external finance and mergers and acquisitions.

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Article provided by Taylor & Francis Journals in its journal Applied Economics Letters.

Volume (Year): 11 (2004)
Issue (Month): 11 ()
Pages: 675-678

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Handle: RePEc:taf:apeclt:v:11:y:2004:i:11:p:675-678
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  1. E. P. Davis, 2001. "Multiple Avenues of Intermediation, Corporate Finance and Financial Stability," IMF Working Papers 01/115, International Monetary Fund.
  2. Manganelli, Simone & Hartmann, Philipp & Maddaloni, Angela, 2003. "The euro area financial system: structure, integration and policy initiatives," Working Paper Series 0230, European Central Bank.
  3. Gabriele Galati & Kostas Tsatsaronis, 2001. "The impact of the euro on Europe's financial markets," BIS Working Papers 100, Bank for International Settlements.
  4. Joaquim Vieira Ferreira Levy & Alessandro Calza & Dieter Gerdesmeier, 2001. "Euro Area Money Demand: Measuring the Opportunity Costs Appropriately," IMF Working Papers 01/179, International Monetary Fund.
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