Monetary integration and the cost of borrowing
With European Monetary Union (EMU), there was an increase in the adjusted spreads of euro-area sovereign securities over Germany (corrected from the foreign exchange risk), causing a lower than expected fall in borrowing costs. The objective of this paper is to study the reasons for this increase, a...
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| Tipo de recurso: | artículo |
| Estado: | Versión aceptada para publicación |
| Fecha de publicación: | 2008 |
| País: | España |
| Institución: | Universidad de Barcelona |
| Repositorio: | Dipòsit Digital de la UB |
| OAI Identifier: | oai:diposit.ub.edu:2445/107186 |
| Acceso en línea: | https://hdl.handle.net/2445/107186 |
| Access Level: | acceso abierto |
| Palabra clave: | Unions monetàries Liquiditat (Economia) Risc (Economia) Mercat monetari Deute Monetary unions Liquidity (Economics) Risk Money market Debt |
| Sumario: | With European Monetary Union (EMU), there was an increase in the adjusted spreads of euro-area sovereign securities over Germany (corrected from the foreign exchange risk), causing a lower than expected fall in borrowing costs. The objective of this paper is to study the reasons for this increase, and in particular, whether the change in the price assigned by markets was due to domestic factors (credit risk and/or market liquidity) or to international risk factors. The empirical evidence suggests that it may have been a change in the market assessment of domestic (both liquidity and default risk) rather than international factors that caused the observed increase in adjusted spreads with Monetary Integration, even though, since market size scale economies have increased since EMU, their effect differs according to the size of the market. |
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