The fundamental determinants of financial integration in the European Union

J.J.G. Lemmen, S.C.W. Eijffinger

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Abstract

This paper focuses on the fundamental determinants of the degree of financial integration in the European Union over the period 1973-1993. Using closed interest differentials to measure the intensity of capital controls and applying a panel data approach, we find realized inflation rates, government deficits, current account deficits and credits to the domestic economy to be significantly positively correlated with the intensity of capital export restrictions. In addition, low productivity in the business sector and low availability of sophisticated deposit instruments are positively related to the intensity of capital export controls. Consequently, remaining differences in national economic and financial structures, should be of greater interest to policymakers.
Original languageEnglish
PublisherUnknown Publisher
Number of pages34
Volume1995-117
Publication statusPublished - 1995

Publication series

NameCentER Discussion Paper
Volume1995-117

Keywords

  • Control
  • EU
  • Financial Integration
  • monetary economics

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