International credit market integration in northwestern Europe in the 1670s

2019 ◽  
Vol 26 (2) ◽  
pp. 127-145
Author(s):  
Ling-Fan Li
Keyword(s):  
Exchange Rate ◽  
Transaction Cost ◽  
Financial Market ◽  
Market Integration ◽  
Credit Markets ◽  
Credit Market ◽  
Disruptive Effect ◽  
Speed Of Adjustment ◽  
Financial Market Integration ◽  
International Credit

This article studies the financial market integration in the 1670s by examining the effectiveness of triangular exchange arbitrage. The results suggest that international credit markets based on bills of exchange in northwestern Europe were well integrated and responded to exchange-rate differences quickly. The speed of adjustment, ranging between one and three weeks, accorded with the speed of communication, but the transaction cost associated with exchange arbitrage was much lower than that of shipping bullion. Although warfare had a disruptive effect on exchange arbitrage by increasing transaction cost, markets were resilient in remaining efficient.

Financial Market Integration and Exchange Rate Policy

1990 ◽  
Vol 90 (2) ◽  
pp. 1 ◽  
Author(s):  
Liliana Rojas-Suárez ◽  
Donald J. Mathieson ◽  
◽  
Keyword(s):  
Exchange Rate ◽  
Financial Market ◽  
Market Integration ◽  
Exchange Rate Policy ◽  
Financial Market Integration ◽  
Rate Policy

The pattern of exchange rate co-movement in selected African countries

2016 ◽  
Vol 43 (6) ◽  
pp. 928-953 ◽  
Author(s):  
Emmanuel Carsamer
Keyword(s):  
Exchange Rate ◽  
Interest Rate ◽  
Foreign Exchange ◽  
Financial Market ◽  
Market Integration ◽  
Foreign Exchange Market ◽  
Dynamic Panel Data ◽  
Exchange Market ◽  
Content Type ◽  
Financial Market Integration

Purpose The concept of co-movement has witnessed a resurgence in the international finance literature in recent years after the black swan events. This might be due to a renewed focus on globalization and financial market integration in the world over. The purpose of this paper is to examine the dynamic linkages in the foreign exchange market resulting from recent globalization and financial market integration in Africa. Design/methodology/approach A conceptual framework was adapted from the extant literature and was used as the basis of modeling foreign exchange market in Africa. This paper adopts a quantitative research approach and opted for dynamic panel data analysis to empirically unearth the determinants of foreign exchange market co-movement. Findings It is interesting to note that exchange rate co-movements were externally determined. Robust support was found for trade intensity, competition and world interest rate on foreign exchange rates co-movement, but regional interest rate differential decreased it. These findings clearly demonstrate the level of financial development and challenges that sometimes exist in exchange rate policy implementation by policy makers in Africa. Research limitations/implications Future research might incorporate bilateral investment into the model of exchange rate correlation. Originality/value Studies focussing on simultaneous consideration of intensity, trade competition and capital account openness to exchange rate correlations in the contexts of Africa are almost non-existent, and this study makes an important contribution in not only addressing this imbalance but also more importantly improving the relatively parsimonious literature on foreign exchange co-movement.

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