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Capital Market Integration in Euroland: The Role of Banks
Published/Copyright:
November 30, 2019
Abstract
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. Implications of market integration for the risk-taking and the monitoring of banks are not clear-cut.
Published Online: 2019-11-30
Published in Print: 2000-12-01
© 2019 by Walter de Gruyter Berlin/Boston
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Articles in the same Issue
- The Effectiveness of Employment Vouchers: A Simple Approach
- Technology and Cartel Stability under Vertical Differentiation
- Capital Market Integration in Euroland: The Role of Banks
- News Management in Monetary Policy: When Central Banks Should Talk to the Government
- Index: Volume 1, 2000
Articles in the same Issue
- The Effectiveness of Employment Vouchers: A Simple Approach
- Technology and Cartel Stability under Vertical Differentiation
- Capital Market Integration in Euroland: The Role of Banks
- News Management in Monetary Policy: When Central Banks Should Talk to the Government
- Index: Volume 1, 2000
