International financial integration in the presence of an international duopoly

Karavitis, P. and Michael, M. S. (2022) International financial integration in the presence of an international duopoly. European Journal of Finance, 28(8), pp. 825-847. (doi: 10.1080/1351847X.2021.1931389)

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We revisit the debate on the benefits of international financial integration. We build a partial equilibrium imperfectly competitive model with two countries, where each country has one firm. Firms are Cournot competitors. Within this framework, we examine how the liberalization of international capital flows affects the welfare of each country and their joint welfare. Our results show that international capital flows' liberalization cannot guarantee the improvement in each country's welfare and their joint welfare. Overall, we find that international financial integration has very heterogeneous effects, depending on the market size, the initial level of capital stock and the degree of product competition.

Item Type:Articles
Glasgow Author(s) Enlighten ID:Karavitis, Dr Panagiotis
Authors: Karavitis, P., and Michael, M. S.
College/School:College of Social Sciences > Adam Smith Business School > Accounting and Finance
Journal Name:European Journal of Finance
Publisher:Taylor and Francis
ISSN (Online):1466-4364
Published Online:24 May 2021
Copyright Holders:Copyright © 2021 The Authors
First Published:First published in European Journal of Finance 28(8): 825-847
Publisher Policy:Reproduced under a Creative Commons License

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