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Please use this identifier to cite or link to this item: http://hdl.handle.net/2108/71

Title: Monetary union, institutions and financial market integration, Italy 1862-1905
Authors: Toniolo, Gianni
Conte, Leandro
Vecchi, Giovanni
Keywords: financial market integration
monetary union
nineteenth-century Italy and vested interests
Issue Date: Mar-2003
Publisher: CEIS
Series/Report no.: CEIS Tor Vergata Research Paper
16
Abstract: The Paper draws its motivation from the observation that, three years into the single currency, EMU financial markets are making only slow progress towards integration and from the belief that economic history can offer useful insights as to the causes of the phenomenon. In this vein, we investigate a previous case of financial market integration in the wake of monetary unification, that of Italy after 1862. We find that the prices of the Rendita Italiana 5% (Italian Consols) across regional stock exchanges did not fully converge until 1887, 25 years after the creation of a 'monetary union' in the peninsula. Regression analysis shows that variables such as the spread of ICT, trade volumes and the diffusion of the 'single currency' fail to explain the delay in financial market unification. We argue that markets remained relatively fragmented because local vested interests resisted the legal and regulatory changes needed to make arbitrage across individual stock exchanges efficient. A si...
URI: http://ssrn.com/abstract=406120
http://hdl.handle.net/2108/71
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