The Euro and Financial Market Integration
George Washington University - Department of International Business
University of Pennsylvania - Management Department
Journal of Common Market Studies, Vol. 43, No. 1, pp. 1-11, March 2005
One of the projected benefits of the euro was to be a unified capital market. The cost of capital would be lower and this, coupled with the larger market, would motivate large EU entities to satisfy their financing needs within the euro area. Our results support the expectation that the financial markets of the euro area countries would become more unified with a lowered cost of capital, especially for the less financially credible countries. It appears, however, that the benefit of a lower cost of capital has also accrued to the three EU countries that did not adopt the euro.
Number of Pages in PDF File: 11
Date posted: February 9, 2005