European Financial Integration: Finally the Great Leap Forward?*

Abstract

The recent history of financial integration in Europe can generally be considered a success story, notwithstanding the crisis that has plagued financial sectors in Europe and elsewhere since 2007. There has been significant progress in the area of regulatory integration; however, an in-depth analysis requires also taking into account what happens on the ground -that is, at the market level. As a consequence of this larger and more interactive point of view, this article shows that financial integration is less uniform than a cursory look at the evolution of European Union regulation would have us believe. This is because national contexts continue to bear considerable weight. In particular, any explanation of the current state of affairs in the EU's financial integration needs to take the market-regulation nexus seriously. This implies looking at market structure as well as at the political and institutional context. This article suggest a framework to explain more adequately the contradictions between regulatory and market integration. * Earlier versions of this article were presented at the 2007 European Union Studies Association meeting in Montreal, the 2007 meeting of the Associations francophones de science politique in Quebec City, and the 2008 European Community Study Association-Canada meeting in Edmonton. For their comments and suggestions, we are grateful to Ivo Maes, Frédéric Mérand, Sabine Saurugger, Jean-Marc Trouille, Nicolas Véron, Brigitte Young and, especially, Cornelia Woll, as well as an anonymous reviewer. All remaining errors and omissions are our own.

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