Financial Innovations and Economic Convergence in the European Union: Evidence from Regional Cohesion Policy Reconfiguring

Otilia Manta () and Teodor Emanuel Petreanu ()
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Otilia Manta: Romanian Academy, School of Advanced Studies of the Romanian Academy, Doctoral School of Economic Sciences, National Institute of Economic Research "Costin C. Kirițescu", Center for Financial and Monetary Research "Victor Slăvescu", Bucharest Romanian Academy, Mountain Economy Centre CE-MONT Vatra Dornei, ROMANIA
Teodor Emanuel Petreanu: Romanian Academy, School of Advanced Studies of the Romanian Academy, Doctoral School of Economic Sciences, National Institute of Economic Research "Costin C. Kirițescu", Center for Financial and Monetary Research "Victor Slăvescu", Bucharest, ROMANIA

Global Economic Observer, 2026, vol. 14, issue 1, 88-94

Abstract: This study analyses the structural transformations of European cohesion policy in the context of the acceleration of inter- and intra-regional disparities within the European Union, with a focus on the post-2014 period and the specific challenges of the 2021–2027 multiannual financial framework. By capitalising on an integrated theoretical framework, which combines neoclassical convergence theory, institutionalist approaches to regional economics and financial innovation perspectives, the study assesses the capacity of structural financial instruments to generate real and sustainable economic convergence. The empirical analysis uses panel data for 234 NUTS-2 regions from 27 Member States, covering the period 2000–2023, and applies econometric models with fixed effects, complemented by robustness tests using GMM-Arellano-Bond. The results demonstrate that financial innovations, in particular repayable financial instruments (RFIs), social impact bonds and public guarantee mechanisms, significantly amplify the multiplier effect of cohesion funds, with an estimated elasticity of 1.47 compared to 0.89 for classic grants. The article proposes an integrated dynamic allocation model based on composite indices of territorial vulnerability, with direct implications for the architecture of post-2027 cohesion policy.

Keywords: cohesion policy; economic convergence; financial innovations; regional disparities; structural funds; NUTS-2; repayable financial instruments; regional development; European Union; econometric panel model (search for similar items in EconPapers)
JEL-codes: F15 G20 O47 R11 R58 (search for similar items in EconPapers)
Date: 2026-06
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