Capital Market Integration and Macroeconomic Stability

Franziska Bremus and Ruth Stelten

No 116, DIW Roundup: Politik im Fokus from DIW Berlin, German Institute for Economic Research

Abstract: After the establishment of the Banking Union, the European Commission is working on measures to foster capital market deepening in Europe. Key goals for a European Capital Markets Union are to provide firms with alternative funding sources to bank credit and to make economies more resilient to local shocks through better international risk sharing. While open capital markets can improve portfolio diversification, growth and welfare, the recent financial crisis was a reminder that capital market integration also carries risks in terms of economic stability. This article summarizes pros and cons of capital market openness and discusses stability implications of different forms of capital market integration.

Pages: 7 p.
Date: 2017
New Economics Papers: this item is included in nep-fmk
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Persistent link: https://EconPapers.repec.org/RePEc:diw:diwrup:116en

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