EMU Effects on Stock Markets: From Home Bias to Euro Bias

International Research Journal of Finance and Economics, Vol. 15, pp. 136-158, May 2008

Posted: 14 May 2009

See all articles by Maela Giofré

Maela Giofré

University of Turin - Department of Economics and Statistics; CeRP-CCA; Netspar

Date Written: May 10, 2008

Abstract

The shift of perspective from a national basis to a Euro area basis, inevitably induced by EMU, has led member countries to a parallel shift from equity home bias to equity Euro bias. We interpret this evidence by means of a standard mean-variance portfolio selection model modified in order to include information asymmetries, considering the effect of the EMU integration process on equity markets through informational channels, real and financial. We find a stronger informational impact of the financial channel relative to the real channel in shaping EMU countries' equity portfolios after integration.

Keywords: financial integration, portfolio choice, home bias, information asymmetries

JEL Classification: F21, F36, G11, G14, G15

Suggested Citation

Giofré, Maela, EMU Effects on Stock Markets: From Home Bias to Euro Bias (May 10, 2008). International Research Journal of Finance and Economics, Vol. 15, pp. 136-158, May 2008, Available at SSRN: https://ssrn.com/abstract=1404599

Maela Giofré (Contact Author)

University of Turin - Department of Economics and Statistics ( email )

Lungo Dora Siena 100/A
Torino, Turin - Piedmont 10153
Italy

CeRP-CCA ( email )

Via Real Collegio 30
Moncalieri (TO), Turin 10024
Italy

Netspar ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

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