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In or out: the effect of euro membership on the exercise of real business options

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  • Tom Aabo
  • Christos Pantzalis

Abstract

This empirical study of manufacturing firms (NAICS 33) in the EU15 countries goes beyond the trade statistics that have indicated only a small to negligible effect from the introduction of the Euro and shows that the introduction of the Euro has made Euro firms (firms based in one of the 12 Euro countries) more inclined than non-Euro firms (firms based in one of the three non-Euro countries: UK, Sweden, and Denmark) to undertake various forms of real actions (exercise real business options) such as to establish alliances/partnerships, to enter new markets/market segments, to switch suppliers, and to generally expand in the Euro-area. The results are important in understanding the potential long-term effects of Euro membership.

Suggested Citation

  • Tom Aabo & Christos Pantzalis, 2011. "In or out: the effect of euro membership on the exercise of real business options," The European Journal of Finance, Taylor & Francis Journals, vol. 17(4), pages 259-284.
    • Handle: RePEc:taf:eurjfi:v:17:y:2011:i:4:p:259-284
    DOI: 10.1080/13518471003640142
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    References listed on IDEAS

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    1. Mongelli, Francesco Paolo & Vega, Juan Luis, 2006. "What effects is EMU having on the euro area and its member countries? An overview," Working Paper Series 599, European Central Bank.
    2. Baldwin, Richard & Di Nino, Virginia, 2006. "Euros and Zeros: The Common Currency Effect on Trade in New Goods," CEPR Discussion Papers 5973, C.E.P.R. Discussion Papers.
    3. James J. Heckman, 1976. "Introduction to "Annals of Economic and Social Measurement, Volume 5, number 4"," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 5, number 4, National Bureau of Economic Research, Inc.
    4. Baldwin, Richard E. & Skudelny, Frauke & Taglioni, Daria, 2005. "Trade effects of the euro: evidence from sectoral data," Working Paper Series 446, European Central Bank.
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    Cited by:

    1. Ian Manners, 2013. "The 2012 Danish Presidency of the Council of the European Union: Bridging Exclusion," Journal of Common Market Studies, Wiley Blackwell, vol. 51, pages 70-79, September.
    2. Chansog Kim & Christos Pantzalis & Jung Chul Park, 2014. "Do Family Owners Use Firm Hedging Policy to Hedge Personal Undiversified Wealth Risk?," Financial Management, Financial Management Association International, vol. 43(2), pages 415-444, June.

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