Measuring European financial market integration. A literature review

Abstract

The purpose of this paper is to highlight the level of European financial integration, based on the academic literature analyzing a comprehensive set of indicators and methodologies. We structured our research on sections that present a theoretical approach of the instruments that will be used in order to evaluate the progress of financial integration and their limits; the evolution of this process from EMU to the global crisis and beyond by studying financial integration indicators according to Adam et al. (2002) classification, and some considerations about the developments in the European Union new member states. Our concluding remarks outline the widespread use of quantitative and price-based indicators, as well as the different degree of integration from one financial sector to another.financial integration; common currency; the law of one price; beta convergence; home bias