Financial Integration of Western Balkan Countries Do Foreign Capitals Matter?

Fabienne Bonetto () and Irina Syssoyeva-Masson ()
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Fabienne Bonetto: University of Nice-Sophia Antipolis, CEMAFI, France
Irina Syssoyeva-Masson: University of Nice-Sophia Antipolis, CEMAFI, France

Chapter 7 in Financial Systems Integration of Balkan Countries in the European Financial System: Impact of Global Crisis, 2009, vol. 1, pp 59-67 from Institute of Economic Sciences

Abstract: The impact of international financial integration on economic performance continues to be one of the most debated issues among economists. Theoretical models have identified a number of channels through which financial integration can promote economic development and growth in developing countries and countries in transition. However, in spite of its benefits, financial integration can also be dangerous, as it has been witnessed in many recent financial crises. Therefore, this paper presents potential benefits and costs of financial integration as well as new risks currently threatening Western Balkan countries. Since the composition of capital inflows can also have an influence on the vulnerability of countries to exogenous financial shocks, this paper studies theoretical effects of different types of foreign capital inflows on the host country economy and analyses different patterns of foreign capital inflows received by Western Balkan countries. This paper concludes with some recommendations concerning further integration of these countries into the EU financial system.

Keywords: Financial integration; foreign capital inflows; Western Balkan countries (search for similar items in EconPapers)
Date: 2009
ISBN: 978-2-7466-1290-7
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Citations: View citations in EconPapers (1)

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