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EU-Med Capital Market Integration and the EU’s Covered Bonds Directive

Author

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  • Lucke Bernd

    (University of Hamburg, Hamburg, Germany)

Abstract

I analyze the potential of the EU’s Covered Bonds Directive (EU) 2019/2162 to promote the integration of Mediterranean Partner Countries (MPCs) into the EU’s Capital Market Union. I identify legal and supervisory conditions conducive for a successful development of covered bond (CB) markets. A formal model is presented to show how covered bond finance could be introduced in a banking environment in such a way that problems of asset encumbrance and unsecured debt runs are at least mitigated. Next, I study the question to what extent the EU’s covered bond framework is compatible with Islamic concepts of banking and finance? Finally, some policy objectives of EU and MPC governments are pointed out which can be expected to benefit from secured forms of bank debt funding such as covered bonds.

Suggested Citation

  • Lucke Bernd, 2024. "EU-Med Capital Market Integration and the EU’s Covered Bonds Directive," Review of Middle East Economics and Finance, De Gruyter, vol. 20(3), pages 267-298.
    • Handle: RePEc:bpj:rmeecf:v:20:y:2024:i:3:p:267-298:n:1004
    DOI: 10.1515/rmeef-2024-0023
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    More about this item

    Keywords

    covered bonds; Islamic banking and finance; financial integration;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • G01 - Financial Economics - - General - - - Financial Crises
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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