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Immigrants’ impact on financial market – European countries’ evidence

Teodora Cristina Barbu () and Iustina Boitan
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Teodora Cristina Barbu: Bucharest University of Economic Studies, Faculty of Finance and Banking, Romania

Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, 2018, vol. 36, issue 1, 183-212

Abstract: The aim of this research is to answer to the question of whether immigrants’ inflow might influence financial markets. The qualitative analyses of descriptive statistics and immigrants’ nationality allowed us to ascertain which the most preferred immigrants’ destinations are across the European countries, but also to get a picture of the countries from which most immigrants come from. Then, using annual data ranging from 1998 to 2014 for 20 European countries, a three-fold analysis was performed as to unveil complementary statistical links between immigrants’ inflow and several financial sector specific indicators. The analysis comprehensively considered the main components of the financial sector, namely the banking sector, the insurance one, the capital market and private pensions. First we relied on the correlation and causality approach, complemented by the use of a panel regression with fixed effects. According to the country by country investigation, the information provided by the descriptive statistics, by the causality test and by the size of the fixed effects estimated through panel regressions shows that Germany clearly detaches itself among the other European countries considered. This most wanted destination among European countries and the second most preferred in the world, records the most pronounced and persistent influence of the number of immigrants on several financial sector features. From the standpoint of the financial sector, the most influenced by immigrants’ inflow, it has been found that bank specific variables are on the top. This result confirms both economic intuition and practice, because immigrants are more prone to use basic banking services rather than invest on the capital market or sign life and non-life insurance contracts.

Keywords: immigration; financial access; financial system; causality; panel data (search for similar items in EconPapers)
JEL-codes: C23 F22 G20 (search for similar items in EconPapers)
Date: 2018
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