Financial Integration at Times of Financial Instability

Jan Babecký, Lubos Komarek () and Zlatuse Komarkova ()

Working Papers from Czech National Bank, Research and Statistics Department

Abstract: This article analyzes the phenomenon of financial integration on both the theoretical and empirical levels, focusing primarily on assessing the impacts of the current financial crisis. In the theoretical section we first look at the definition of financial integration and summarize the benefits and costs associated with this process. We go on to examine the relationship between financial integration and financial instability, emphasizing the priority role of financial innovation. The subsequent empirical section provides an analysis of the speed and level of integration of the Czech financial market and the markets of selected inflation-targeting Central European economies (Hungary and Poland) and advanced Western European economies (Sweden and the United Kingdom) with the euro area. The results for the Czech Republic reveal that a process of increasing financial integration has been going on steadily since the end of the 1990s and also that the financial crisis caused only temporary price divergence of the Czech financial market from the euro area market.

Keywords: Beta-convergence; financial crisis; financial integration; gamma-convergence; new EU Member States; propagation of shocks; sigma-convergence. (search for similar items in EconPapers)
JEL-codes: C23 G12 G15 (search for similar items in EconPapers)
Date: 2010-12
New Economics Papers: this item is included in nep-cba, nep-eec, nep-ifn, nep-mon and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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https://www.cnb.cz/export/sites/cnb/en/economic-re ... wp/cnbwp_2010_09.pdf

Related works:
Journal Article: Financial Integration at Times of Financial Instability (2013)
Chapter: Financial Integration at Times of Financial (In)Stability (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:cnb:wpaper:2010/09

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