Capital Market Integration in Euroland - The Role of Banks

Arbeitspapier

The introduction of the euro marks a milestone in the process of European financial market integration. This paper analyzes the implications of the euro for cross-border banking activities. A portfolio model is used which captures the role of banks as providers of informational and of risk-diversification services. By eliminating exchange rate risks, the euro enhances the incentives of banks to expand within Euroland. Yet, while the currency bias in bank portfolios will be eliminated, the home bias will remain. It is also argued that positive diversification effects may outweigh possible negative effects on the risk taking of banks.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Kiel Working Paper ; No. 932

Classification and Topics

• Classification: Wirtschaft ; Asymmetric and Private Information; Mechanism Design ; Financial Aspects of Economic Integration ; Banks; Depository Institutions; Micro Finance Institutions; Mortgages
• Subject: capital mobility ; European financial integration ; banking ; asymmetric information ; portfolio choice ; Finanzmarkt ; Marktintegration ; Bank ; Internationale Kapitalmobilität ; Portfolio-Management ; Europäische Wirtschafts- und Währungsunion ; Asymmetrische Information ; Bankrisiko ; Theorie ; EU-Staaten

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Buch, Claudia M.
• Event: Veröffentlichung
• (who): Kiel Institute of World Economics (IfW)
• (where): Kiel
• (when): 1999

Further information

• Handle: http://hdl.handle.net/10419/17792
• Last update: 10.03.2025, 11:44 AM CET