Kiel Working Papers, Kiel Institute for World Economics
No 1062:
Financial Market Integration in a Monetary Union
Claudia M. Buch
Abstract: Financial markets in Euroland differ from those of a
national monetary union in two regards. First, capital markets in general
and banking markets in particular show a greater degree of segmentation
than national financial markets as a result of information costs and
regulatory barriers to full integration. Second, financial market
structures differ among the members of Euroland, which potentially affects
the transmission of (monetary) shocks. This paper provides a simple model
of a currency union which takes these peculiarities into account, focusing
on the interaction of financial structures, the degree of capital mobility,
the transmission of shocks, and the portfolio choices of banks.
Keywords: monetary union, capital mobility, financial structures, transmission channels, commercial banking; (follow links to similar papers)
JEL-Codes: F36; (follow links to similar papers)
47 pages, July 2001
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