Financial Integration within EU Countries: The Role of Institutions, Confidence and Trust

Mehmet Ekinci, Sebnem Kalemli-Ozcan and Bent Sorensen

No 13440, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We investigate the degree of financial integration within and between European countries. We construct two measures of de-facto integration across European regions to capture "diversification" and "development" finance in the language of Obstfeld and Taylor (2004). We find evidence that capital market integration within the EU is less than what is implied by theoretical benchmarks and also less than what is found for U.S. states. We ask - why is this the case? Using country-level data for economic institutions, we find that these are not able to explain differences between countries. Using regional data from the World Values Surveys, we investigate the effect of "social capital" on financial integration among European regions. We find regions, where the level of confidence and trust is high, are more financially integrated with each other.

JEL-codes: F21 F41 (search for similar items in EconPapers)
Date: 2007-09
New Economics Papers: this item is included in nep-eec and nep-soc
Note: IFM
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Citations: View citations in EconPapers (44)

Published as Financial Integration within EU Countries: The Role of Institutions, Confidence and Trust , Mehmet Fatih Ekinci, Şebnem Kalemli-Özcan, Bent E. Sørensen. in NBER International Seminar on Macroeconomics 2007 , Clarida and Giavazzi. 2008

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Chapter: Financial Integration within EU Countries: The Role of Institutions, Confidence and Trust (2009)
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