ABSTRACT
The concept of economic integration took a comprehensive form when defined by Pinder as ‘both the removal of discrimination as between the economic agents of the member countries, and the formation and application of co-ordinated and common policies on a sufficient scale to ensure that major economic and welfare objectives are fulfilled’. Capital market integration ‘implies the replacement of separate regulatory frameworks by one central machinery for the regulation of credit interest rates, financial institutions and securities business’. In short, capital market integration refers to the steps taken to increase capital mobility of which the abolition of exchange controls on capital flows within the area is the most important. In capital-market integration, holders of securities issues in the various countries are treated equally through ‘the rules applicable to the taxation of income on domestic and foreign securities, the system of withholding taxes, and the way in which interest or dividends paid are reported to the tax administration’.
