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Financial Integration (financial + integration)

Distribution by Scientific Domains

Business, Economics, Finance and Accounting	92%

Selected Abstracts

Financial Integration and EMU

EUROPEAN FINANCIAL MANAGEMENT, Issue 1 2005
Franklin Allen
G21; G34; F23 Abstract This paper investigates the effect of European Monetary Union on the integration of the financial services industry within European using data on the announcements of M&A's within the industry. We find some evidence that EMU has helped financial integration within the euro area. In addition, financial institutions in EMU countries became more active in initiating integration between EMU and non-EMU partners, which also contributed to overall regional integration within European. The more active role of EMU institutions suggests that institutions residing in the eurozone became stronger players in the corporate control market. However, EMU does not facilitate the entry of non-European institutions into European. [source]

Financial Integration in the EU: the First Phase of EU Endorsement of International Accounting Standards,

JCMS: JOURNAL OF COMMON MARKET STUDIES, Issue 2 2008
IAN DEWING
In 2002 the EU adopted the Regulation which required European listed companies to prepare their consolidated accounts in accordance with international accounting standards from 2005 onwards. A novel set of structures for the endorsement of international accounting standards for use in the EU was put in place. This article examines the first phase of endorsement of international accounting standards in the context of the novel endorsement structures. The article concludes that problems over the endorsement of IAS 39 Financial Instruments: Recognition and Measurement reveals a number of significant policy implications for the EU including the difficulty of forming a European view, the role of private actors in EU regulation, and the issue that international standards largely reflect Anglo-Saxon accounting practices rather than continental European practices. [source]

Linkages between Trade and Financial Integration and Output Growth in East Asia

ASIAN ECONOMIC JOURNAL, Issue 1 2010
Maria Socorro Gochoco-Bautista
E32; F42; F43 The effects of trade, financial and other variables generally seen as indicative of the degree of economic integration on movements in industrial production growth among countries in East Asia are assessed using the common component of movements in industrial production growth in the ASEAN 5 + 3 countries as a business cycle benchmark for the region. The results show the dominance of trade-related variables, as well as the world price of oil, in driving regional industrial production growth. Financial variables, while important, are not as robust. [source]

Financial integration, capital mobility, and income convergence

ECONOMIC POLICY, Issue 58 2009
Abdul Abiad
Summary Recent studies have found that capital moves ,uphill' from poor to rich countries, and brings little or no growth dividend when it does flow into poor economies. We show that Europe does not conform to this paradigm. In the European experience of financial integration, capital has flown from rich to poor countries, and such inflows have been associated with significant acceleration of income convergence. Analysing broader samples of countries, we find that ,downhill' capital flows tend to be observed above certain thresholds in institutional quality and financial integration. But Europe remains different even when allowing for such threshold effects, and its experience is similar to that of interstate flows within the United States. Our findings are consistent with the notion that financial diversification reduces countries' incentives to save in order to self-insure against specific shocks. ,Abdul Abiad, Daniel Leigh and Ashoka Mody [source]

Competition Among Banks, Capital Requirements and International Spillovers

ECONOMIC NOTES, Issue 3 2001
Viral V. Acharya
The design of prudential bank capital requirements interacts with the industrial organization of the banking sector, in particular, with the level of competition among banks. Increased competition leads to excessive risk-taking by banks which may have to be counteracted by tighter capital requirements. When capital requirements are internationally uniform but the levels of competition among banks in different countries are not, international spillovers arise on financial integration of these countries. This result begs a more careful analysis of the effect of financial liberalization on the stability of banking sectors in emerging countries. It also calls into question the merits of employing uniform capital requirements across countries that diverge in the industrial organization of their banking sectors. (J.E.L.: G21, G28, G38, F36, E58, D62) [source]

Cross-country experiences and policy implications from the global financial crisis

ECONOMIC POLICY, Issue 62 2010
Stijn Claessens
Summary The financial crisis of 2007--2008 is rooted in a number of factors, some common to previous financial crises, others new. Analysis of post-crisis macroeconomic and financial sector performance for 58 advanced countries and emerging markets shows a differential impact of old and new factors. Factors common to other crises, like asset price bubbles and current account deficits, help to explain cross-country differences in the severity of real economic impacts. New factors, such as increased financial integration and dependence on wholesale funding, help to account for the amplification and global spread of the financial crisis. Our findings point to vulnerabilities to be monitored and areas of needed national and international reforms to reduce risk of future crises and cross-border spillovers. They also reinforce a (sad) state of knowledge: much of how crises start and spread remains unknown. --- Stijn Claessens, Giovanni Dell'Ariccia, Deniz Igan and Luc Laeven [source]

Financial integration, capital mobility, and income convergence

Financial Integration and EMU

The Retreat of Deposit Dollarization,

INTERNATIONAL FINANCE, Issue 3 2008
Patrick Honohan
After growing rapidly during the 1990s, the scale of deposit dollarization has slowed or even reversed since 2001. This paper employs an expanded cross-country data set on the share of bank deposits denominated in foreign currency. It documents the break in trend and seeks to explain this apparent reversal in this aspect of global financial integration. Valuation changes related to dollar weakness from 2002 do not seem to be the cause. But lower inflation in many countries has reduced the attractions of foreign currency as a hedge. Also, the Argentine crisis of 2001,02 may have heightened investor awareness of the risk of forced conversion of foreign currency deposits. A return to higher inflation and fading memories of forced conversions could lead to a resumption in the growth of deposit dollarization, with the banking risks that this can entail. [source]

Financial Globalization: Unequal Blessings

INTERNATIONAL FINANCE, Issue 3 2002
Augusto De La Torre
This paper presents a framework to analyse financial globalization. It argues that financial globalization needs to take into account the relation between money (particularly in its role as store of value), asset and factor price flexibility, and contractual and regulatory institutions. Countries that have the ,blessed trinity' (international currency, flexible exchange rate regime, and sound contractual and regulatory environment) can integrate successfully into the (imperfect) world financial markets. Developing countries, though, normally display the ,unblessed trinity' (weak currency, fear of floating, and weak institutional framework). The paper defines and discusses two alternative avenues (a ,dollar trinity' and a ,peso trinity') for developing countries to safely embrace international financial integration while the blessed trinity remains beyond reach. [source]

A tale of two ,globalizations': capital flows from rich to poor in two eras of global finance

INTERNATIONAL JOURNAL OF FINANCE & ECONOMICS, Issue 4 2006
Moritz Schularick
Abstract In this paper we take a comparative look at the patterns of capital flows from rich to poor countries in two eras of financial globalization. The paper extends recent research on the developmental effects of international financial integration, long-term trends in capital mobility and ,globalization in historical perspective'. Analysing the patterns of international financial integration in the three decades of the classical gold standard and after 1990 we show that investment in developing countries was a central element of 19th century financial globalization, but plays only a minor role today. The Lucas paradox of capital failing to flow from rich to poor has grown much stronger. In historical perspective, today's financial globalization is marked by massive diversification flows between high-income economies and a relative marginalization of less-developed economies. Copyright © 2006 John Wiley & Sons, Ltd. [source]

Dimensions of financial integration in Greater China: money markets, banks and policy effects

INTERNATIONAL JOURNAL OF FINANCE & ECONOMICS, Issue 2 2005
Yin-Wong Cheung
Abstract The financial linkages between the People's Republic of China (hereafter ,China') and the other Greater China economies of Hong Kong and Taiwan are assessed, and compared against those of China with Singapore, Japan and the United States. For both sets of links, there is evidence that ex post uncovered interest parity tends to hold over longer periods, and the magnitude of the parity deviations is shrinking over time. The deviations depend upon the extent of capital controls, and in certain cases, exchange rate volatility. However, while the money markets of China are increasingly linked to money markets in the rest of the world, our empirical results suggest that the banking sector,the main source of capital for Chinese firms,remains insulated. Copyright © 2005 John Wiley & Sons, Ltd. [source]

Government size and openness revisited: the case of financial globalization

KYKLOS INTERNATIONAL REVIEW OF SOCIAL SCIENCES, Issue 3 2009
Alena Kimakova
SUMMARY The volatility of international capital flows to emerging markets has been well documented. Financial globalization may not in general fulfill its theoretical role as a risk sharing mechanism in financially underdeveloped economies, and hence may provide an impetus for compensating government spending. Comparative studies of the public sector have provided evidence of a robust positive association between government size and openness of the economy to trade flows. This paper extends the existing literature by investigating the relationship between government size and financial openness for 87 developing and developed countries between 1976 and 2003. The analysis reveals a positive relationship between exposure to international capital flows and government size. Furthermore, interacting capital flows with income levels shows that richer open economies tend to have smaller government size. These findings are consistent with the hypothesis that benefits of financial integration, in terms of improved risk-sharing and consumption smoothing, accrue only beyond a certain minimum level of financial development. [source]