Integrimi Financiar i Shqipërisë me Eurozonën – Një Vlerësim Sasior
Financial Integration of Albania in the Euro Zone - A Quantitative Assessment

Summary/Abstract: This study evaluates the degree of financial integration between Albania and the Euro area. Under the framework of a factors model, financial integration represents that part of the return variation which is explained by the common factor. The degree of financial integration can be estimated by the correlation of asset returns of different countries. Our correlation measures are the co – movements of 1 – year government discount bill returns in Albania, Euro area, Germany and US. The co – movements are consistently estimated by quantile regressions. We compare the returns co – movements for the period 2009 – 11 versus 2007 – 09. Our findings show that for the last two years, there has been an increase in financial integration of Albania with the Euro area. By the means of US data as a control variable, we show that our result is robust to the co – movements of returns caused by the ongoing process of globalization. We also find that financial integration of Albania with the Euro area is similar in magnitude with Poland’s integration with the Euro area for the period 2003 – 05.

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