Financial Market Integration: the Case of France in the Light of Empirical Evidence

Christian Bordes

Chapter 15 in Tax Harmonization and Financial Liberalization in Europe, 1992, pp 193-207 from Palgrave Macmillan

Abstract: Abstract This paper examines the integration of French financial markets from an internal and an external point of view. By integration we mean a situation where two conditions hold: (i) valuation efficiency, a market is said to be efficient if the value of an asset equals the present value of expected future flows of income (Tobin, 1984); (ii) risk pricing equivalence, there exist no obstacles to the trade in financial assets and, therefore, the price required for bearing a given type of risk is the same for all investors and for all segments of a given capital market. In a situation where international integration of financial capital markets is perfect, consumption risks are mutualized. Individual consumption is then linked to global consumption; each individual has the possibility of getting rid of risks which are specific to him, to endure only a part of the global risk — the so-called ‘optimal sharing rule’.

Keywords: Money Market; Bond Market; Capital Asset Price Model; Risk Free Asset; Financial Liberalization (search for similar items in EconPapers)
Date: 1992
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-349-22008-3_15

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DOI: 10.1007/978-1-349-22008-3_15

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