Financial services spillover effects on informal economic activity: evidence from a panel of 20 European countries

Hatice Imamoğlu, Salih Katircioğlu and Cem Payaslıoğlu

The Service Industries Journal, 2018, vol. 38, issue 11-12, 669-687

Abstract: This study aims to investigate the spillover effects of the financial services sector development on the size of informal economic activity in the case of the European Union (EU) countries. The results from panel data analysis show that there exists an inverted U-shaped relationship between financial services and informal economic activity in the EU; that is, at the initial levels of the financial development, the reaction of informal economic activity is positive while it becomes negative at the further stages of the financial development in the EU. Thus, this study finds that financial services sector is a major contributor to changes in the volume of informal economic activity in the EU countries.

Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:taf:servic:v:38:y:2018:i:11-12:p:669-687

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DOI: 10.1080/02642069.2017.1423056

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The Service Industries Journal is currently edited by Eileen Bridges, Professor Domingo Ribeiro, Ronald Goldsmith, Barry Howcroft and Youjae Yi

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