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The Euro and Financial Market Integration *
Author(s) -
ASKARI HOSSEIN,
CHATTERJEE JOYDEEP
Publication year - 2005
Publication title -
jcms: journal of common market studies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.54
H-Index - 90
eISSN - 1468-5965
pISSN - 0021-9886
DOI - 10.1111/j.0021-9886.2005.00543.x
Subject(s) - capital market , cost of capital , capital (architecture) , economics , financial market , finance , financial capital , financial integration , business , eu countries , monetary economics , international economics , european union , market economy , human capital , archaeology , history , incentive
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.