Analysis of Banking Integration Degree in Romania

The process of economic integration between Romania and the Euro area has supposed the emphasis both of the trade and the financial linkages between these economies, especially during the period 2003-2008. Prior to the economic crisis, the foreign financial flows in have generated a fast increase of the non-governmental loan which determined the increase of the private consumption, investments, imports, respectively of the current account deficit and of the foreign private debt. The economic crisis started in 2008 emphasized the significance of the financial channel for the transmission of shocks as the increase of the Romanian economy's foreign exposure supposes additional financial flows to finance the service of debt. In order to assess the economy's degree of exposure to the financial shocks we have determined the degree of banking intermediation in Romania and the degree of banking integration with the economies of the Euro area.