DP4395 Financial Market Integration and Economic Growth in the EU

Author(s): Luigi Guiso, Tullio Jappelli, Mario Padula, Marco Pagano
Publication Date: June 2004
Keyword(s): financial development, financial integration, growth
JEL(s): D92
Programme Areas: International Macroeconomics, Financial Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=4395

The diversity in the current degree of financial development across the EU can be a great opportunity at a time where this area is poised to become increasingly financially integrated. Integration should accelerate the development of the most backward financial markets, and allow companies from these countries to access more sophisticated credit and security markets. In line with a large recent literature, it is reasonable to expect that financial integration will have a ?growth dividend? in Europe. This Paper attempts to quantify this growth dividend, using both industry and firm-level data to estimate the empirical relationship between financial market development and growth, and to gauge how it will distribute itself across countries and sectors.