European Financial Integration and Global Financial Liberalization

We generally admit markets are integrated if the law of one price is verified. This approach, applied to financial markets, gives place to two complementary criteria allowing the measurement of integration intensity: The first refers to mobility; meaning the possibility offered to national investors to move their assets over the borders so as to place their investments wherever they wish. The second concerns assets substitutability, meaning the possibility offered to national investors to rearrange their securities portfolio by substituting the national assets for foreign assets and vice versa, following a change in their rate of return.