IDEAS home Printed from https://ideas.repec.org/a/aka/aoecon/v68y2018i3p353-376.html
   My bibliography  Save this article

The Eurozone TARGET-system from the Perspective of Portugal

Author

Listed:
  • Raquel R. da Costa

    (Banco de Portugal, Lisboa, Portugal)

  • Sérgio Lagoa

    (ISCTE – Instituto Universitário de Lisboa, Lisboa, Portugal)

Abstract

Payment systems make a significant contribution to the flow of transactions and financial stability. In this paper, we start by applying the principles of the gravity model to explain the TARGET flows of banking transactions between Portugal and other eurozone countries. The main explanatory variables tested are a composite indicator of economic and financial activities, distance, membership of the Eurozone (EZ), and country risk measured by treasury bond yields. The results indicate that Portugal has a high level of integration in the European banking market as distance is not statistically significant, and that the membership of the EZ facilitates the financing of the economy. The economic size of the partner country becomes non-significant after controlling for country fixed effects. The increase in the Portuguese country risk during the European sovereign debt crisis led to a marked decline in external financing, indicating that this is an important channel of transmission of crises.

Suggested Citation

  • Raquel R. da Costa & Sérgio Lagoa, 2018. "The Eurozone TARGET-system from the Perspective of Portugal," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 68(3), pages 353-376, September.
    • Handle: RePEc:aka:aoecon:v:68:y:2018:i:3:p:353-376
    Note: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of Banco de Portugal. We thank Banco de Portugal for granting access to the data on TARGET flows. The authors ackowledge helpful comments and suggestions from two anonymous referees.
    as

    Download full text from publisher

    File URL: http://www.akademiai.com/doi/pdf/10.1556/032.2018.68.3.3
    Download Restriction: subscription
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Keywords

    Gravity Model; cross-border transactions; payment systems; TARGET2;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • E59 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Other

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aka:aoecon:v:68:y:2018:i:3:p:353-376. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kriston, Orsolya (email available below). General contact details of provider: https://akademiai.hu/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.