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Financial integration and growth - Is emerging Europe different?

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Author Info

  • Christian Friedrich

    (Graduate Institute for International and Development Studies, Geneva)

  • Isabel Schnabel

    (Johannes Gutenberg University, Mainz)

  • Jeromin Zettelmeyer

    (EBRD)

Abstract

Using industry-level data, this paper shows that the European transition region benefited much more strongly from financial integration in terms of economic growth than other developing countries in the years preceding the current crisis. We analyse several factors that may explain this finding: financial development, institutional quality, trade integration, political integration, and financial integration itself. The explanation that stands out is political integration. Within the group of transition countries, the effect of financial integration is strongest for countries that are politically closest to the European Union. This suggests that political and financial integration are complementary and that political integration can considerably increase the benefits of financial integration.

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Bibliographic Info

Paper provided by European Bank for Reconstruction and Development, Office of the Chief Economist in its series Working Papers with number 123.

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Length: 43 pages
Date of creation: Dec 2010
Date of revision:
Handle: RePEc:ebd:wpaper:123

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Cited by:
  1. Evans, Olaniyi, 2013. "International Financial Integration and The Nigerian Economic Performance: a Var Modeling Approach," MPRA Paper 52459, University Library of Munich, Germany.
  2. Wendy Carlin, 2011. "Good Institutions are not Enough: Ongoing Challenges of Eastern German Development," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, vol. 9(1), pages 28-34, 05.
  3. Kosta Josifidis & Radmila Dragutinović Mitrović & Olgica Ivančev, 2012. "Heterogeneity of Growth in the West Balkans and Emerging Europe: A Dynamic Panel Data Model Approach," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 59(2), pages 157-183, May.
  4. Gehringer, Agnieszka, 2012. "Financial liberalization, growth, productivity and capital accumulation: The case of European integration," Center for European, Governance and Economic Development Research Discussion Papers 134, University of Goettingen, Department of Economics.

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