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Integration from Retail Banking to Non-Financial Corporations in EMU

Author

Listed:
  • Sehgal, Sanjay

    (University of Delhi)

  • Gupta, Priyanshi

    (Department of Financial Studies, University of Del)

  • Deisting, Florent

    (Groupe ESC Pau)

Abstract

This paper investigates the integration process within the European Economic and Monetary Union’s retail banking industry by analyzing deposit and lending rates to nonfinancial corporations. The investigation covers the 2003~2014 period, examining the normal period, the global crisis period, and the European debt crisis period. The paper classifies sampled countries into three groups on the basis of their Gross Domestic Product to investigate the relationship between economic size and degree of integration. We employ five different indicators to assess various dimensions of integration: beta convergence, sigma convergence, variance ratio, asymmetric dynamic conditional correlation, and dynamic co-integration. The results point toward a weak degree of integration, which was worsened by the twin crises. In addition, results indicate that more heterogeneity exists in the credit market than in the deposits market. Furthermore,short-term maturity products are observed to be more converged than longer-term maturity products. We also observe a positive relationship between economic size of sampled countries and the degree of retail banking integration.

Suggested Citation

  • Sehgal, Sanjay & Gupta, Priyanshi & Deisting, Florent, 2016. "Integration from Retail Banking to Non-Financial Corporations in EMU," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 31(3), pages 674-735.
    • Handle: RePEc:ris:integr:0697
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    Cited by:

    1. Priyanshi Gupta & Sanjay Sehgal, 2020. "Convergence of retail banking interest rates to households in euro area: time-varying measurement and determinants," International Economics and Economic Policy, Springer, vol. 17(1), pages 25-65, February.

    More about this item

    Keywords

    Economic and Monetary Union; Retail Banking to Non-Financial Corporations; Global Financial Crisis; Eurozone Debt Crisis; Time-Varying Retail Banking Integration.;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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