Munich Personal RePEc Archive

EMU Effects on Stock Markets: From Home Bias to Euro Bias

Giofré, Maela/M. (2008): EMU Effects on Stock Markets: From Home Bias to Euro Bias. Published in: International Research Journal of Finance and Economics No. 15 (May 2008): pp. 128-150.

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Abstract

The shift of perspective from a national basis to a Euro area basis, inevitably induced by EMU, has led member countries to a parallel shift from equity home bias to equity Euro bias. We interpret this evidence by means of a standard mean-variance portfolio selection model modified in order to include information asymmetries, considering the effect of the EMU integration process on equity markets through informational channels, real and financial. We find a stronger informational impact of the financial channel relative to the real channel in shaping EMU countries' equity portfolios after integration.

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