Financial Market Integration: the Case of France in the Light of Empirical Evidence

  • Christian Bordes


This paper examines the integration of French financial markets from an internal and an external point of view. By integration we mean a situation where two conditions hold: (i) valuation efficiency, a market is said to be efficient if the value of an asset equals the present value of expected future flows of income (Tobin, 1984); (ii) risk pricing equivalence, there exist no obstacles to the trade in financial assets and, therefore, the price required for bearing a given type of risk is the same for all investors and for all segments of a given capital market. In a situation where international integration of financial capital markets is perfect, consumption risks are mutualized. Individual consumption is then linked to global consumption; each individual has the possibility of getting rid of risks which are specific to him, to endure only a part of the global risk — the so-called ‘optimal sharing rule’.


Money Market Bond Market Capital Asset Price Model Risk Free Asset Financial Liberalization 
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© Confederation of European Economic Associations 1992

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  • Christian Bordes

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