Financial Integration into EU: The Romanian Case
Author:Ibrahim Bozkurt and Engin Akman
JEL:F36, F21, F30, G15
DOI:
Keywords:financial integration, European Union, Romania, gravity model, stock markets
Abstract:
The aim of this study is to investigate the determinants of integration between stock market
of Romania and other stock markets of European Union (EU) countries. Correlations
between the stock returns represent the level of integration between the stock markets.
Empirical analysis are performed with daily stock returns of 24 EU members including
Romania for 2002-2012 period using panel data gravity models and correlations are
investigated. Findings reveal that the following factors have significant and robust effects
on the financial integration process of Romania with other 23 EU members; (i) EU
membership, (ii) bilateral trade, (iii) GDP per capita, (iv) 2012 sovereign debt crisis and
(v) East European location. The results emphasize that intensifying economic relations with
EU members can contribute the integration of Romanian stock market with other EU
members.