Smedts, Kristien

English

Research Papers in Economics

  1 
Tijdschrift voor Economie en Management 
Vol. LI, 1, 2006  
 
 
Financial Integration in EMU:  
Where Do We Stand? 
  
by K. SMEDTS * 
 
 
 
 
 
 
 
 
ABSTRACT 
 
This  paper  reviews  the  empirical  literature  on  the  degree  of  financial 
integration  in  EMU  and  analyzes  whether  the  process  of  integration 
accelerated with the introduction of the Euro. If the launch of EMU expedited 
financial  integration,  this  affected  pricing  of  assets  and  optimal  portfolio 
allocation.  We  focus  on  the  Euro  area  sovereign  bond  market,  the  money 
market  and  the  stock  markets  and  review  whether  the  pricing  of  assets 
converged  to  a  mechanism  of  EMU-pricing.  Furthermore,  we  discuss  the 
impact of EMU on portfolio adjustments. Finally, we look at the evolution of 
the cost of capital and the risk sharing capacity of the EMU market. 
 
 
 
 
 
 
 
 
 
 
_____________________ 
* This paper, based on Chapter 2 of Smedts (2004), was written while I was Aspirant of the 
F.W.O.-Vlaanderen associated at CES, KULeuven. I thank an anonymous referee for valuable 
comments. 
 
 
Kristien Smedts 
KULeuven, Department of AFI, Leuven 

Financial integration in EMU: Where do we stand?.

https://lirias.kuleuven.be/bitstream/123456789/119615/1/TEM_2006-1%20smedts_abstract.pdf

Financial integration in EMU: Where do we stand?.

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Research Papers in Economics