The Impact of the Euro on Europe's Financial Markets

Abstract

BIS Working Papers are written by members of the Monetary and Economic Department of the Bank for International Settlements, and from time to time by other economists, and are published by the Bank. The papers are on subjects of topical interest and are technical in character. The views expressed in them are those of their authors and not necessarily the views of the BIS.

Testing for Opaqueness in the European Banking Industry: Evidence from Bond Credit Ratings

“…Other factors can explain this evolution like, for example, the financial integration process at a global level, which in turn is due to the wave of financial liberalization and information technology revolution. Many authors document this convergence in the most important financial segments, namely money, bond, and equity markets, as well as banking (Danthine et al 2001;Galati and Tsatsaronis 2001;Hartmann et al 2003;Rajan and Zingales 2003;Pagano and von Thadden 2004). As far as bond markets are concerned, it should be noted that most of the European firms issue on the Eurobond market; 4 that is an international market where issuing procedures and disclosure requirements are determined by market practices.…”

Does the Euro affect the dynamic relation between stock market liquidity and the business cycle?

“…Several theoretical and empirical papers have been published that establish the Euro's relationship to trends in European economies and financial market behavior (e.g. Askari & Chatterjee (2005); Galati & Tsatsaronis (2003); Von Hagen & Neumann (1994); Layard, Buiter, Hune, Hutton, Kenen, & Turner (1981); Danthine, Giavazzi, & Von Thadden (2000); Buiter (1999)). According to a European Central Bank (ECB) report, the introduction of the Euro was expected to impact various types of risks to which banks are exposed (The European Central Bank, 1999), including strategic, credit, market liquidity, credit institutions liquidity, settlement, operational, and legal risks.…”

“…The second strand is the economic and monetary union literature, notably those studies related to the Euro currency and the Eurozone equity markets (e.g. Askari & Chatterjee (2005); Kim, Moshirian, & Wu (2005); Galati & Tsatsaronis (2003); Von Hagen & Neumann (1994); Layard, Buiter, Hune, Hutton, Kenen, & Turner (1981); Danthine, Giavazzi, & Von Thadden (2000); Buiter (1999)). …”

Country v sector effects in equity returns and the roles of geographical and firm-size coverage

“…The HR article sparked off a lively debate in the literature. According to some, the importance of countries in the behaviour of stock returns has waned in the 1990s (Hardouvelis et al 2006;Emiris 2002;Campa and Fernandes 2006;Carrieri et al 2003;Isakov and Sonney 2004;Baca et al 2000;Cavaglia et al 2000;Galati and Tsatsaronis 2003). But other studies disagree (Sentana 2002;Rouwenhorst 1999;Brooks and Del Negro 2005;Gerard et al 2003).…”