What lies beneath the euro's effect on financial integration? Currency risk, legal harmonization, or trade?

• 成果类型: Article
• 署名作者: Kalemli-Ozcan, Sebnem; Papaioannou, Elias; Peydro, Jose-Luis
• 署名单位: University of Houston System; University of Houston; Dartmouth College; European Central Bank
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2010.02.002
• 发表日期: 2010
• 页码: 75-88
• 关键词: financial integration; law and finance; euro; TRADE; regulation

摘要

Although recent research shows that the euro has spurred cross-border financial integration, the exact mechanisms remain unknown. We investigate the underlying channels of the euro's effect on financial integration using data on bilateral banking linkages among twenty industrial countries in the past thirty years. We also construct a dataset that records the timing of legislative-regulatory harmonization policies in financial services across the European Union. We find that the euro's impact on financial integration is primarily driven by eliminating the currency risk. Legislative-regulatory convergence has also contributed to the spur of cross-border financial transactions. Trade in goods, while highly correlated with bilateral financial activities, does not play a key role in explaining the euro's positive effect on financial integration. (C) 2010 Elsevier B.V. All rights reserved.