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.

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.

• Item Type: MPRA Paper
• Language: English
• Keywords: financial integration; portfolio choice; home bias; information asymmetries
• Subjects: G - Financial Economics > G1 - General Financial Markets > G11 - Portfolio Choice ; Investment Decisions; G - Financial Economics > G1 - General Financial Markets > G15 - International Financial Markets; F - International Economics > F2 - International Factor Movements and International Business > F21 - International Investment ; Long-Term Capital Movements; F - International Economics > F3 - International Finance > F36 - Financial Aspects of Economic Integration

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