Impact of migration on capital markets

The European Union is at a crossroads, facing on one hand an unprecedented wave of refugees and/or migrants, and on the other hand a fear that some of its member states could leave it. Brexit will eventually take place, which means that people or enterprises domiciled in Great Britain may want to move or go back to a member state, creating also some intra European Union migration flow of human and fiscal capital. Migrants not only increase the population of a country but may very well contribute to the labor market, the social security schemes and the capital markets of the country they join, starting from the banking sector and extending to the stock and bond markets. At the same time though, they may choose to invest or direct part of their income back to their home country. This depends on the country of origin and the feasibility it provides for such a return of funds. In other cases, they may decide to temporarily save money and repatriate upon their return, potentially at retirement. In this new environment some of the countries of the European Union will find themselves accepting people and enterprises from Great Britain, but also from other parts of the world. This may create “new” financial centers within the European Union, some of them smaller and some of them bigger. In this paper we use an econometric approach (linear regression) in order to identify what may be the impact of migration to the capital markets of the countries that receive the migrants and - if possible – to the countries from which they depart. At the same time, we investigate the consequences to the entrepreneurial life of such countries. We test our results for heterskedasticity and robustness. The data we employ come from the European Migration Network, the Organisation for Economic Co-operation and Development (OECD) and the World Bank, and cover the countries of the European Union for the years since 2012. We anticipate that we will realize a positive effect of migration to the capital markets of the countries that receive migrants (although at this point of time our research is still ongoing).

Keywords: migration, capital market, stock market, entreprises.