Convergence and Capital Flows in Europe: The Role of Financial Intermediation and Investor Quality

Rémy Lecat and Dorothée Pasquier de Franclieu ()
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Dorothée Pasquier de Franclieu: Banque de France

De Economist, 2024, vol. 172, issue 2, No 1, 119 pages

Abstract: Abstract Economic convergence was a goal of the European Union and financial integration was part of the tools to achieve this goal. After decades of successful convergence and closer financial integration, these movements have slowed since the Great Financial Crisis. In this paper, we contribute to explaining these stylized facts by showing, in a country panel setting, with 2SLS estimates, that the positive impact on productivity growth of financial flows, and in particular those intermediated by the banking system, depends on the quality of financial intermediation in the recipient country, but also on the quality of investors in the investor countries.

Keywords: Convergence; Capital flows; Productivity; European union (search for similar items in EconPapers)
JEL-codes: F3 O16 O47 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s10645-024-09434-6

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