Financial Crisis, Banking Sector Performance and Economic Growth in the European Union

Candida Ferreira

Economia Internazionale / International Economics, 2018, vol. 71, issue 3, 257-288

Abstract: This paper uses static and dynamic panel estimates in a sample including all 28 European Union countries during the last decade and provides empirical evidence on the important role that well-functioning EU banking institutions can play in promoting economic growth.In order to analyse the possible differences arising after the outbreak of the recent international financial crisis, the estimations consider two panels: one for the time period 1998-2012 and another for the subinterval 2007-2012.Considering only the years after the crisis (2007-2012), the variation of the Net Interest Margin was in line with the GDP while the variations of the Equity to Total Assets Ratio and the Equity to Liabilities Ratio contrast the GDP growth rate. These differences between the two considered time panels reflect the reactions of the European banking institutions to the recent financial crisis, as they, in general, adopted a less risky performance and decided to give particular emphasis to the traditional banking activities: receiving deposits and providing credit to finance the productive investment, in order to promote economic growth. Crisi finanziarie, attività del settore bancario e crescita economica nell’Unione Europea Al fine di illustrare l’importante ruolo che le istituzioni bancarie europee potrebbero svolgere nella promozione della crescita economica se ben gestite, questo studio utilizza un campione che include dati panel sia statici che dinamici relativi a tutti i 28 paesi dell’Unione in riferimento all’ultimo decennio. Al fine di analizzare le possibili differenze sorte dopo l’irrompere delle recenti crisi finanziarie, le stime prendono in considerazione due serie di dati: una relativa al periodo 1998-2012 e un’altra relativa all’intervallo 2007-2012. I risultati ottenuti ci consentono di confermare l’importanza delle variazioni sui capitali finanziari, sulla liquidità e sui profitti in rapporto alla crescita economica.Queste differenze rilevate all’interno dei due periodi considerati riflette le reazioni delle istituzioni bancarie europee alle recenti crisi finanziarie in quanto hanno, in generale, adottato politiche meno rischiose privilegiando le attività più tradizionali: raccolta del risparmio e concessione del credito per finanziare gli investimenti produttivi al fine di promuovere la crescita economica.

Keywords: Bank Performance; Economic Growth; European Union; Financial Crisis; Panel Estimates (search for similar items in EconPapers)
JEL-codes: F30 F40 G20 G30 O40 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Working Paper: Financial Crisis, banking sector performance and economic growth in the European Union (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:ris:ecoint:0829

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