EMU Equity Market Integration: Case The Netherlands

Abstract

This is a survey about the integration process of the EMU equity markets where the focus is on the Dutch equity markets. The main question is: are the Dutch equity markets are more converged after 1999 with the other EMU countries than before 1999. The tests are based on two cointegration methods. The Engle-Granger and the Johansen Procedure. Overall, the results of the tests indicate that the Dutch equity markets are more converged with the other EMU countries after 1999. In the first place, the EMU or EU membership has a positive effect on the equity integration process for especially the Nordic countries. Second, the integration process of the EMU peripheral countries seems to be stronger than before 1999 although the financial crisis of 2007-2009 had a strong negative effect on this process. Third, the Euronext countries indicate they are better integrated than non-Euronext countries. Nevertheless, the US equity market is still the dominant market for the Netherlands even though the importance of the UK equity markets has increased. In every investigated case the financial crisis of 2007-2009 strongly disturbed the EMU integration process.   

Author: Verheggen, S.A.
Date: June 27, 2011
University of Amsterdam (UvA)


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