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Convergence of Corporate Finance Patterns in Europe

Author

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  • A Mullineux
  • V Murinde
  • R Sensarma

Abstract

We investigate the patterns of corporate financing through bank loans, bond markets and stock markets in the European Union (EU). Specifically, we examine whether the EU economies are converging towards a market-oriented or a bank-oriented financial system. Panel unit root tests and GMM regressions are applied to flow of funds data for eight EU countries over the period 1972-2004. We find that the patterns of corporate financing in the EU mimic elements of the pecking order theory of financing choices. Furthermore, the EU financial system seems to be converging on a variant of the Anglo-Saxon model, with heavy reliance on internal financing and financing from the capital market.

Suggested Citation

  • A Mullineux & V Murinde & R Sensarma, 2010. "Convergence of Corporate Finance Patterns in Europe," Economic Issues Journal Articles, Economic Issues, vol. 15(2), pages 49-68, September.
    • Handle: RePEc:eis:articl:210mullineaux
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    Cited by:

    1. Martin C. Arnold & Christoph Hanck, 2019. "On Combining Evidence from Heteroskedasticity Robust Panel Unit Root Tests in Pooled Regressions," JRFM, MDPI, vol. 12(3), pages 1-22, July.
    2. Julia Koralun-Bereźnicka, 2014. "On the Relative Importance of Corporate Working Capital Determinants: Findings from the EU Countries," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 8(4), December.
    3. Mullineux, Andy, 2014. "Banking for the public good," International Review of Financial Analysis, Elsevier, vol. 36(C), pages 87-94.

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