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Economic Integration and Financial Stability: A European Perspective

Author/Editor: De Nicoló, Gianni | Tieman, Alexander F.
Authorized for Distribution: December 1, 2006
Electronic Access: Free Full Text (PDF file size is 821KB)
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.

Summary: This paper assesses changes in synchronization of real activity and financial market integration in Western Europe and evaluates their implications for financial stability. We find increased synchronization of real activity since the early 1980s and increased equity markets integration since the early 1990s. We also find that measures of systemic risk at large European financial institutions have not declined during the period 1990-2004 and that bank systemic risk profiles have converged. At the same time, the sensitivity of bank and insurance systemic risk measures to common real and financial shocks has increased in most countries. Overall, these results suggest that the integration process does not necessarily entail an unambiguously positive effect on financial stability.
 
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Series: Working Paper No. 06/296
Subject(s): Financial stability | Europe | European Union | Economic models
Author's keyword(s): Financial stability | economic integration | Europe
 
English  
    Published:   December 1, 2006        
    ISBN/ISSN:   1934-7073   Format:   Paper
    Stock No:   WPIEA2006296   Pages:   28
    Price:   US$18.00 (Academic Rate: US$18.00 )
       
     
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