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Financial integration faced with the crisis: comparative cases of Greece and Portugal

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  • Farzad Mirmahboub

    (University of Nice Sophia Antipolis)

Abstract

The recent economic and financial crisis affected many countries in the world in several aspects. Studies of crisis impacts on different aspects of economies would be useful to better understand the actions of each part faced with crisis, as well as the influences of each part on others. In the present research, we studied and compared the international financial integration level and its variations caused by the recent crisis for Greece and Portugal that are strongly affected. Using the Feldstein–Horioka thesis and applying ARDL model with error correction, we measured the financial integration level of these two countries. Also, using simulation, we verified how such a level can be changed by the crisis. We found that the Greece’s financial integration level is affected by the recent crisis, while this crisis has not affected the Portugal’s financial integration level. Moreover, the results for both cases were somehow considered as support for the Feldstein–Horioka initial hypothesis.

Suggested Citation

  • Farzad Mirmahboub, 2017. "Financial integration faced with the crisis: comparative cases of Greece and Portugal," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 64(3), pages 269-284, September.
    • Handle: RePEc:spr:inrvec:v:64:y:2017:i:3:d:10.1007_s12232-017-0272-9
    DOI: 10.1007/s12232-017-0272-9
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    More about this item

    Keywords

    Financial integration; Feldstein–Horioka thesis; Crisis; ARDL model with error correction; Simulation;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • G01 - Financial Economics - - General - - - Financial Crises

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