Convergence of Corporate Finance Patterns in Europe

A Mullineux, V Murinde and Rudra Sensarma

Economic Issues Journal Articles, 2010, vol. 15, issue 2, 49-68

Abstract: We investigate the patterns of corporate financing through bank loans, bond markets and stock markets in the European Union (EU). Specifically, we examine whether the EU economies are converging towards a market-oriented or a bank-oriented financial system. Panel unit root tests and GMM regressions are applied to flow of funds data for eight EU countries over the period 1972-2004. We find that the patterns of corporate financing in the EU mimic elements of the pecking order theory of financing choices. Furthermore, the EU financial system seems to be converging on a variant of the Anglo-Saxon model, with heavy reliance on internal financing and financing from the capital market.

Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:eis:articl:210mullineaux

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