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Are the new and old EU countries financially integrated?

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Abstract

During the last four years, the eight Eastern European countries that joined the EU in 2004 have made significant strides toward financial integration with the EU. Several pieces of evidence support this finding. First, yields on long-term sovereign bonds in accession countries have converged towards EU levels. This is true for both bonds denominated in local currency and bonds denominated in euro. Second, while the issuance of euro-denominated corporate bonds from accession countries is limited, yields on existing corporate bonds are in line with those in the old EU countries. Third, margins in the banking sector have narrowed, which is consistent with the integration of banking markets. Finally, we note that the current stock market rally is consistent with equity market integration.

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  • Tomas Dvorak & Chris R. A. Geiregat, 2004. "Are the new and old EU countries financially integrated?," Department of Economics Working Papers 2004-09, Department of Economics, Williams College.
    • Handle: RePEc:wil:wileco:2004-09
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    File URL: https://web.williams.edu/Economics/wp/geiregatdvorak2004.pdf
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    Cited by:

    1. Cappiello, Lorenzo & Gérard, Bruno & Kadareja, Arjan & Manganelli, Simone, 2006. "Financial integration of new EU Member States," Working Paper Series 683, European Central Bank.
    2. Wohlmann, Monika, 2015. "Finanzmarktintegration in Mittelosteuropa: Eine empirische Analyse der integrativen Wirkung des Euro," Arbeitspapiere der FOM 55, FOM Hochschule für Oekonomie & Management.
    3. Markus Baltzer & Lorenzo Cappiello & Roberto A. De Santis & Simone Manganelli, 2008. "Measuring financial integration in new EU member states," Occasional Paper Series 81, European Central Bank.

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    More about this item

    Keywords

    financial integration; Eastern Europe; EU enlargement;
    All these keywords.

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • P33 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - International Trade, Finance, Investment, Relations, and Aid

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