ABSTRACT
As financial markets expand, their fluctuations have stronger effects on real economic variables such as private consumption. Thus, along with a number of benefits, financial integration brings certain costs; a detailed discussion of the costs and benefits of financial integration is provided by Agénor (2003). It is widely believed that the benefits outweigh the costs, provided that mechanisms of controlling for financial stability are implemented. The importance of the financial integration is also emphasized by many policy makers, for example, Trichet (2008, 2007, 2006, 2005), Papademos (2008a, 2008b) or Yam (2006).
