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Market standards in financial contracting: The Euro’s effect on debt securities

Andreas Engert and Lars Hornuf

Journal of International Money and Finance, 2018, vol. 85, issue C, 145-162

Abstract: The introduction of the Euro ushered in a rise to dominance of English contract law in European debt securities. Corporate issuers in the Euro zone chose English law significantly more often than a control group from other European countries. The Euro effect on choice of law is particularly strong for debt securities in local markets that, arguably, were most affected by the Euro. The Euro effect is not explained by differences in the suitability of English law compared to other laws, a change in issuer composition or debt securities types, and the greater market share of British and American underwriters. We argue that increased standardization benefits (network effects) from a boost in cross-border investment provide the best account of why English law conquered the European debt securities market.

Keywords: Financial contracting; Standardization; Network effects; Debt securities; Economic and monetary union (search for similar items in EconPapers)
JEL-codes: G15 L14 K12 (search for similar items in EconPapers)
Date: 2018
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