The Financial Integration and Its Flipside with a Focus on Banking and Stock Markets of Central, Eastern, and Southeastern European Countries

As a very popular research topic, the integration among financial markets has been studied by many researchers. This thesis aims to investigate the effect of financial integration on European markets from another point of view. For this reason, various researches have been combined to assess the impact of financial integration on different types of financial markets. This thesis focuses primarily on the CESEE region and covers Bulgaria, Croatia, the Czech Republic, Hungary, Poland, Romania, and Turkey. The countries are selected to be a sample from EU member states and EU candidates. Some CESEE countries are not included in the research due to some data limitations (Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia, Serbia, Slovakia, Slovenia, Russia, and Ukraine). This study uses and combines the results of the various research methodologies such as wavelet technique, cluster analysis, and GARCH models. After the introduction of the thesis and hypotheses, the second chapter explains financial integration and its impacts on Central, Eastern, and Southeastern European economies. In the third chapter of this thesis, cluster analysis gives us an overview of the banking sector clusters in Europe. “The Cluster Analysis of the Banking Sector in Europe” which is a part of “Economics and Management of Global Value Chains: Regional Clusters, Local Networks, and Entrepreneurship” was written with my co-author Saysi Sayaseng. By using banking sector ratios, similarities and differences in the sector have been analyzed. This chapter provides hints about the integrity of the union banking sector. The following chapter employs a wavelet method to investigate the co-movements of stock markets during the debt crisis and after with a focus on central and southeastern European economies and a member candidate country. “A Wavelet Coherence Analysis: Contagion in Emerging Countries Stock Markets” which was published in Periodica Polytechnica Social and Management Sciences is written with my co-author Ilhami Karahanoglu. This chapter allows the reader to see the uneven impacts of integration during and after the crisis. The fifth chapter of the thesis analyses the spillover effects causing by Germany, the US, and the UK to observe the relationship between developed and developing markets. Finally, the last chapter combines and concludes the results of the sections. As a combination of the results of the chapters, it can be concluded that financial integration in banking and stock markets of CESEE countries is limited. However, it would be expected for a union to be more integrated. The results of studies show that integration can be volatile from one country to another and from one period to another period. The results illustrate that observed countries can show similarities during the crisis, whereas the integration is difficult to diagnose during normal period especially. The analyses in the thesis are supporting each other by asserting that integration of banking and stock markets of CESEE and the western part of Europe is limited or it is not always in favor of CESEE economies