Although there is no single yardstick to gauge the degree of integration, there is ample evidence that financial markets in the euro area have some way to go before national demarcation lines will effectively disappear and financial market integration is satisfactory. While there has been a push...

This paper shows that currency arrangements impact on credit available through default incentives. To this end we build a symmetric two-country model with money and imperfect credit market integration. With the Euro Area context in mind, we capture differences in credit market integration by...