Financial Structure, Investment and Growth of the EU Non-Financial Sector

Esposito Piero, Larocca Vittorio, Messori Marcello and Mischitelli Manuela
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Esposito Piero: University of Cassino and Southern Lazio; European University of Technology
Larocca Vittorio: Ministry of Economy
Messori Marcello: Schumann Center, European University
Mischitelli Manuela: Ministry of Economy and Finance

Journal of Economic Integration, 2026, vol. 41, issue 2, 353-380

Abstract: This paper tests the neutrality view for the Non-Financial Corporations (NFC) sector in the European Union (EU) between 2000 and 2021. We investigate how market-based and bank-based finance can affect Investment and Value-Added performance within this sector. We use a Panel VAR specification to account for the time profile in the response of performance indicators. Our evidence indicates that market-based finance stimulates Value-Added and investment growth in the EU's advanced economies, mainly in Intellectual Property Products. In Eastern and South-Eastern member states, investment growth, especially in tangible goods, is stimulated by bank finance. In this group, market-based finance plays an important role for intangible investment. Three main implications emerge. First, the neutrality view does not hold; second, the economic and financial systems of the various EU countries are characterized by deep differences; third, implementing the Capital Market Union alongside the Banking Union will remain a key priority in the EU.

Keywords: European Union; Financial Structure; Non-financial Corporations; Gross Value Added; Growth; Investment (search for similar items in EconPapers)
JEL-codes: C23 G32 O16 O52 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:ris:integr:022612

DOI: 10.11130/jei.2025021

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