The Shrinkage after the Enlargement? The Effect of Financial Crises and Enlargement on Stock Market Integration in the Euro Area
69 Pages Posted: 10 Mar 2020 Last revised: 1 Apr 2020
Date Written: February 21, 2020
The bilateral foreign portfolio equities among Euro area members have shrunk by 40 percent after 2007. While both the financial crisis and the enlargement are potentially responsible of this abrupt and persistent contraction in financial integration, our work detects a major role for the crisis. The decline in economic development and institutional standards --in particular, the deterioration of the control of corruption mechanisms in Euro periphery economies during the crisis-- are recognized as drivers of this shrinkage.
Keywords: stock market integration; common currency; EMU enlargement
JEL Classification: F21, F30, F36, G11, G15
Suggested Citation: Suggested Citation