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European financial systems through the crisis: Patterns and convergence

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  • Tommaso Colozza
  • Emilio Barucci

Abstract

We investigate the financial crisis as a cut‐off point in EU financial systems’ evolution and assess its effects on cross‐country convergence patterns. Before the crisis, we observe a rise in the centrality of the financial sector, driven by an upward convergent pattern of bank credit. This inflated leverage ratios across all economic sectors, and a catch‐up phenomenon is retrieved in the leveraging of the real sector. The crisis caused a general deleveraging across all economic sectors, with a downward convergence pattern characterizing the financial sector, and triggered an upward convergent pattern in the level of insurance products in households’ portfolios.

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  • Tommaso Colozza & Emilio Barucci, 2021. "European financial systems through the crisis: Patterns and convergence," Review of International Economics, Wiley Blackwell, vol. 29(5), pages 1451-1485, November.
    • Handle: RePEc:bla:reviec:v:29:y:2021:i:5:p:1451-1485
    DOI: 10.1111/roie.12549
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