IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Deepening European Financial Integration: Theoretical Considerations and Empirical Evaluation of Growth and Employment Benefits

  • Beckmann, Rainer
  • Eppendorfer, Carsten
  • Neimke, Markus

This paper analyses some long-run macroeconomic effects of European financial integration. In particular we focus on the further reduction and abolition of cross-border barriers impeding the entry into the markets of banking and insurance products. We follow a theoretical as well as an empirical approach to make predictions about how deeper integration will affect growth and unemployment rates. In our growth model we show that enhanced foreign financial market penetration should increase the overall growth rate unambiguously. The empirical analysis includes a wide set of indicators, each of them capturing different aspects of financial development and financial market integration. On the basis of the estimations a weak growth impact of foreign market penetration can be identified. Hence, deeper financial integration generates a growth bonus. But the long-run growth effect is conditional on differences in institutional characteristics captured by country-specific effects. The analysis is supplemented by an analysis of the potential employment benefits of deeper financial integration. We show that the growth bonus can be transformed into an employment bonus, but also not without considering substantial country-specific differences.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://mpra.ub.uni-muenchen.de/5272/1/MPRA_paper_5272.pdf
File Function: original version
Download Restriction: no

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 5272.

as
in new window

Length:
Date of creation: 2002
Date of revision:
Handle: RePEc:pra:mprapa:5272
Contact details of provider: Postal: Schackstr. 4, D-80539 Munich, Germany
Phone: +49-(0)89-2180-2219
Fax: +49-(0)89-2180-3900
Web page: http://mpra.ub.uni-muenchen.de
More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Greenwood, J. & Jovanovic, B., 1988. "Financial Development, Growth, And The Distribution Of Income," RCER Working Papers 131, University of Rochester - Center for Economic Research (RCER).
  2. Beckmann, Rainer & Eppendorfer, Carsten & Neimke, Markus, 2002. "Financial integration within the European Union: Towards a single market for insurance," MPRA Paper 5280, University Library of Munich, Germany.
  3. Barth, James R. & Caprio, Gerard Jr. & Levine, Ross, 2004. "Bank regulation and supervision: what works best?," Journal of Financial Intermediation, Elsevier, vol. 13(2), pages 205-248, April.
  4. King, Robert G. & Levine, Ross, 1993. "Finance and growth : Schumpeter might be right," Policy Research Working Paper Series 1083, The World Bank.
  5. Rajan, Raghuram G & Zingales, Luigi, 1998. "Financial Dependence and Growth," American Economic Review, American Economic Association, vol. 88(3), pages 559-86, June.
  6. repec:dgr:kubcen:199795 is not listed on IDEAS
  7. Bencivenga, Valerie R & Smith, Bruce D, 1991. "Financial Intermediation and Endogenous Growth," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 195-209, April.
  8. Caprio, Gerard & Honohan, Patrick, 2001. "Finance for Growth: Policy Choices in a Volatile World," MPRA Paper 9929, University Library of Munich, Germany.
  9. De Gregorio, Jose, 1996. "Borrowing constraints, human capital accumulation, and growth," Journal of Monetary Economics, Elsevier, vol. 37(1), pages 49-71, February.
  10. Danthine, Jean-Pierre & Giavazzi, Francesco & von Thadden, Ernst-Ludwig, 2000. "European Financial Markets After EMU: A First Assessment," CEPR Discussion Papers 2413, C.E.P.R. Discussion Papers.
  11. Jones, Larry E & Manuelli, Rodolfo E, 1990. "A Convex Model of Equilibrium Growth: Theory and Policy Implications," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 1008-38, October.
  12. repec:dgr:kubcen:199814 is not listed on IDEAS
  13. Mankiw, N Gregory & Romer, David & Weil, David N, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 407-37, May.
  14. Ansgar Belke, 2001. "Too Big to Fail: Bankenkonkurs, "Bailout" und Wählerstimmenkalkül," Diskussionspapiere aus dem Institut für Volkswirtschaftslehre der Universität Hohenheim 192/2001, Department of Economics, University of Hohenheim, Germany.
  15. Levine, Ross, 1998. "The Legal Environment, Banks, and Long-Run Economic Growth," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 30(3), pages 596-613, August.
  16. Belke, Ansgar & Gocke, Matthias, 1999. "A Simple Model of Hysteresis in Employment under Exchange Rate Uncertainty," Scottish Journal of Political Economy, Scottish Economic Society, vol. 46(3), pages 260-86, August.
  17. King, Robert G. & Levine, Ross, 1993. "Finance, entrepreneurship and growth: Theory and evidence," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 513-542, December.
  18. 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.
  19. Saint-Paul, G., 1990. "Technological Choice, Financial Markets and Economic Development," DELTA Working Papers 90-30, DELTA (Ecole normale supérieure).
  20. Belke, Ansgar, 2002. "Towards a Balanced Policy Mix under EMU: Co-ordination of Macroeconomic Policies and ‘Economic Government’?," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 17, pages 21-53.
  21. Beckmann, Rainer & Hebler, Martin & Kösters, Wim & Neimke, Markus, 2000. "Theoretische Konzepte zum Europäischen Integrationsprozeß: Ein aktueller Überblick
    [Theoretical concepts for the process of European integration: A current overview]
    ," MPRA Paper 35703, University Library of Munich, Germany.
  22. Ansgar Belke & Carsten Eppendorfer & Jens Michael Heine, 2002. "Zur Bedeutung unterschiedlicher Finanzmarktstrukturen für den geldpolitischen Transmissionsmechanismus in der EWU," Diskussionspapiere aus dem Institut für Volkswirtschaftslehre der Universität Hohenheim 200/2002, Department of Economics, University of Hohenheim, Germany.
  23. Atje, Raymond & Jovanovic, Boyan, 1993. "Stock markets and development," European Economic Review, Elsevier, vol. 37(2-3), pages 632-640, April.
  24. King, Robert G. & Levine, Ross, 1993. "Finance and growth : Schumpeter might be right," Policy Research Working Paper Series 1083, The World Bank.
  25. King, Robert G. & Levine, Ross, 1992. "Financial indicators and growth in a cross section of countries," Policy Research Working Paper Series 819, The World Bank.
  26. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
  27. Barth, James R. & Caprio Jr, Gerard & Levine, Ross, 2001. "The regulation and supervision of banks around the world - a new database," Policy Research Working Paper Series 2588, The World Bank.
  28. Ansgar Belke & Daniel Gros, 1999. "Estimating the costs and benefits of EMU: The impact of external shocks on labour markets," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 135(1), pages 1-47, March.
  29. Matthias G�cke & Ansgar Belke, 1999. "Micro and Macro Hysteresis in Employment under Exchange Rate Uncertainty," Computing in Economics and Finance 1999 722, Society for Computational Economics.
  30. Olson, Mancur, Jr & Sarna, Naveen & Swamy, Anand V, 2000. " Governance and Growth: A Simple Hypothesis Explaining Cross-Country Differences in Productivity Growth," Public Choice, Springer, vol. 102(3-4), pages 341-64, March.
  31. Paul M Romer, 1999. "Endogenous Technological Change," Levine's Working Paper Archive 2135, David K. Levine.
  32. World Bank, 2001. "Finance for Growth : Policy Choices in a Volatile World," World Bank Publications, The World Bank, number 13895.
  33. Pagano, Marco, 1993. "Financial markets and growth: An overview," European Economic Review, Elsevier, vol. 37(2-3), pages 613-622, April.
  34. Beckmann, Rainer & Eppendorfer, Carsten & Neimke, Markus, 2002. "Market Access Strategies in the EU Banking Sector - Obstacles and Benefits towards an integrated European Retail Market," MPRA Paper 5273, University Library of Munich, Germany.
  35. Claudia M. Buch, 2000. "Financial Market Integration in the US: Lessons for Europe?," Kiel Working Papers 1004, Kiel Institute for the World Economy.
  36. José de Gregorio, 1999. "Financial integration, financial development and economic growth," Estudios de Economia, University of Chile, Department of Economics, vol. 26(2 Year 19), pages 137-161, December.
  37. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-37, October.
  38. Beck, Thorsten & Demirguc-Kunt, Asli & Levine, Ross, 1999. "A new database on financial development and structure," Policy Research Working Paper Series 2146, The World Bank.
  39. Lee, Jim, 2000. "The Robustness of Okun's Law: Evidence from OECD Countries," Journal of Macroeconomics, Elsevier, vol. 22(2), pages 331-356, April.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:5272. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.