Voltar a Empezar: Crisis and the Renationalization of the Iberian Financial Systems

This paper looks at the partial fragmentation of the euro area resulting from the sovereign debt crisis, concentrating on two specific countries: Portugal and Spain. The paper starts by describing the evolution and structure of those financial systems. It quantitatively evaluates the changes in financial integration, by means of price-based and quantitative-based measures of convergence (sigma-convergence), to demonstrate the significant and persistent fall, with the crisis, in the integration of those financial systems. In addition, the authors present estimations indicating that this fragmentation process was largely self-reinforcing and non-fundamentals based.