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The Euro and Financial Market Integration

11 Pages Posted: 9 Feb 2005  

Hossein Askari

George Washington University - Department of International Business

Joydeep Chatterjee

University of Pennsylvania - Management Department

Abstract

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.

Suggested Citation

Askari, Hossein and Chatterjee, Joydeep, The Euro and Financial Market Integration. Journal of Common Market Studies, Vol. 43, No. 1, pp. 1-11, March 2005. Available at SSRN: https://ssrn.com/abstract=664126

Hossein Askari (Contact Author)

George Washington University - Department of International Business ( email )

2023 G Street NW
Washington, DC 20052
United States

Joydeep Chatterjee

University of Pennsylvania - Management Department ( email )

The Wharton School
Philadelphia, PA 19104-6370
United States

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