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The Growth-Finance Nexus and European Integration: A Macroeconomic Perspective

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Author Info

  • Mariani, Fabio

    (University of Rome "La Sapienza")

  • Padoan, Pierre Carlo

    ()
    (University of Rome "La Sapienza")

Abstract

In this paper we have looked at two issues. We have reconsidered some of the evidence on the growth-finance nexus, taking into account both different sources of growth and different national characteristics. Secondly, we have considered the implications of different growth-finance models in for the process of EU integration, as defined with respect to the targets set at the Lisbon summit, in March 2000. Our estimation results show that: a) finance affects growth though different channels (GDP, investment, productivity, technology) all of which are relevant in EU integration; b) EU membership has played a role in boosting growth through productivity enhancement; c) Both banks and markets have an impact on growth; d) The rise of an innovation related bubble at the end of the 80's has increased the importance of market based finance in boosting technology driven growth, but credit finance has maintained a significant role in supporting investment driven growth (which may be associated in part with enhanced process innovation, itself related to IT); e) While there is evidence of similar growth finance relations across countries the growth-finance nexus is far from homogeneous. National specificities matter both because growth is driven by different factors with different intensity in different countries and because the relative weight of credit and market finance varies across countries. f) In general market finance is more relevant in countries where technology driven growth is more important

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Bibliographic Info

Paper provided by United Nations University, Institute for New Technologies in its series EIFC - Technology and Finance Working Papers with number 23.

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Date of creation: 2003
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Handle: RePEc:dgr:unutaf:eifc03-23

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Web page: http://www.intech.unu.edu

Related research

Keywords: finance; economic growth; European integration; macroeconomics;

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References

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  1. Beck, Thorsten & Levine, Ross, 2000. "New firm formation and industry growth - does having a market- or bank-based system matter?," Policy Research Working Paper Series 2383, The World Bank.
  2. Ross Levine, 1997. "Financial Development and Economic Growth: Views and Agenda," Journal of Economic Literature, American Economic Association, vol. 35(2), pages 688-726, June.
  3. Levine, Ross & Zervos, Sara, 1996. "Stock markets, banks, and economic growth," Policy Research Working Paper Series 1690, The World Bank.
  4. Michael Leahy & Sebastian Schich & Gert Wehinger & Florian Pelgrin & Thorsteinn Thorgeirsson, 2001. "Contributions of Financial Systems to Growth in OECD Countries," OECD Economics Department Working Papers 280, OECD Publishing.
  5. Mariassunta Giannetti & Luigi Guiso & Tullio Jappelli & Mario Padula & Marco Pagano, 2002. "Financial Market Integration, Corporate Financing and Economic Growth," European Economy - Economic Papers 179, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
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  8. Jappelli, Tullio & Pagano, Marco, 2008. "Financial market integration under EMU," CFS Working Paper Series 2008/33, Center for Financial Studies (CFS).
  9. Michael Thiel, 2001. "Finance and economic growth - a review of theory and the available evidence," European Economy - Economic Papers 158, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
  10. Boyan Jovanovic & Jeremy Greenwood, 1999. "The Information-Technology Revolution and the Stock Market," American Economic Review, American Economic Association, vol. 89(2), pages 116-122, May.
  11. Philip Arestis & Panicos O. Demetriades & Kul B. Luintel, 1997. "Financial Development and Economic Growth: the Role of Stock Markets," Keele Department of Economics Discussion Papers (1995-2001) 97/05, Department of Economics, Keele University.
  12. Beck, T.H.L. & Demirgüç-Kunt, A. & Levine, R., 2000. "A new database on financial development and structure," Open Access publications from Tilburg University urn:nbn:nl:ui:12-3125518, Tilburg University.
  13. Shan, Jordan Z & Morris, Alan G & Sun, Fiona, 2001. "Financial Development and Economic Growth: An Egg-and-Chicken Problem?," Review of International Economics, Wiley Blackwell, vol. 9(3), pages 443-54, August.
  14. Thorsten Beck & Ross Levine & Norman Loayza, 1999. "Financial Intermediation and Growth: Causality and Causes," Working Papers Central Bank of Chile 56, Central Bank of Chile.
  15. Carettoni, A & Manzocchi, S & Padoan, P.C., 2001. "The Growth-Finance Nexus and European Integration. A Review of the Literature," EIFC - Technology and Finance Working Papers 5, United Nations University, Institute for New Technologies.
  16. Beck, Thorsten & Levine, Ross, 2001. "Stock markets, banks, and growth : correlation or causality?," Policy Research Working Paper Series 2670, The World Bank.
  17. Mohsin S. Khan & A. Senhadji Semlali, 2000. "Financial Development and Economic Growth," IMF Working Papers 00/209, International Monetary Fund.
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Cited by:
  1. Paolo Guerrieri & Bernardo Maggi & Valentina Meliciani & Pier Carlo Padoan, 2005. "Technology Diffusion, Services, and Endogenous Growth in Europe. Is the Lisbon Strategy Still Alive?," Bruges European Economic Research Papers 2, European Economic Studies Department, College of Europe.
  2. Calcagnini, Giorgio & Saltari, Enrico, 2003. "Labour and Financial Market Determinants of Investment Decisions in Europe," EIFC - Technology and Finance Working Papers 26, United Nations University, Institute for New Technologies.

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