The impact of joining the European Union on the Romanian capital market

• Author: Melnic E.L.
• Pages: 303-310

Bulletin of the Transilvania University of Braşov

Series V: Economic Sciences • Vol. 8 (57) No. 2 - 2015

The impact of joining the European Union on the

Romanian capital market

Elena Lidia MELNIC1

Abstract: This paper approach the theme of the development of the Romanian Stock

Exchange Market (BVB) during the process of joining the European Union. The first goal is

to illustrate the stage of the BVB in the years before the accession to the Union and what

were the perspectives of joining the EU at that time. The second goal is to highlight the

effects the accession had on the neighboring markets: the Polish, the Hungarian and the

Czech markets who joined EU in 2004 and to analyze the correlation between the indexes

from these stock markets and the Romanian stock index. The last goal is to show the impact

of joining the European Union on the Romanian Stock Exchange Market.

Key-words: stock exchange market, stock exchange index, capitalization, emergent markets

1. Introduction

Stock markets are present in all market economies, where securities are being traded

according to special procedures. Joint stock companies can finance their activity

based on two external sources: commercial banks and stock markets. Regarding their

participation in the stock markets, the first step for the companies is to do the

conversion from "closed companies" into "open companies" by making a public

offer for sale of securities (stocks, bonds) that is authorized by the National

Securities Commission. The most important objective of such a public offer is to

attract financial resources on the stock market, from investors who are interested in

buying securities.

The market value for securities shows the public perception on the issuer

activity. The potential creditors of the issuer have the possibility to compare the

book value per share to their market value.

By studying the evolution of the Bucharest Stock Exchange Market (BVB)

from the beginning until Romania joined the European Union in 2007, it reveals a

number of distinct phases in its development: early stage of formation (1995-1996)

led slowly to accelerated and generalized growth in the first half of 1997. In the

second half of 1997, 1998 and 1999 followed a period of regression and generalized

1 Transilvania University of Brasov, elena_melnic@yahoo.com