Financing High-Growth Firms in Europe: Market Integration Matters, but so does Depth

Frank Betz, Pál, Rozália, Andre Sapir and Huyen Tran

No 22085, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Europe’s competitiveness challenge is increasingly linked to its limited ability to generate and scale high-growth firms. This paper examines how capital market development shapes firms’ access to equity finance and how equity financing is associated with subsequent investment and innovation. Combining firm-level data from the European Investment Bank Investment Survey (EIBIS) with ORBIS financial statements and country-level indicators of capital market development, we analyse equity issuance across the European Union, the United Kingdom and the United States. We distinguish between two dimensions of capital market development: capital market depth and market size. Our results show that firms located in deeper and larger capital markets are significantly more likely to issue equity, with the strongest effects observed among young, high-growth and high-tech firms. Firms that issue equity subsequently exhibit higher investment rates, greater innovation intensity and stronger intangible investment. Simulation exercises suggest that aligning EU capital markets with deeper and more integrated benchmarks could substantially expand firms’ access to equity finance. Overall, the results indicate that both the depth and scale of capital markets matter for financing firms with the greatest growth potential, thereby supporting policy efforts to deepen and integrate European capital markets.

Keywords: Capital market union; Savings and investment union; Corporate finance; Innovation; investment (search for similar items in EconPapers)
JEL-codes: G10 G20 G30 G32 L25 O16 O31 O32 (search for similar items in EconPapers)
Date: 2026-10
References: Add references at CitEc
Citations:

Downloads: (external link)
https://cepr.org/publications/DP22085 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:22085

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP22085

Access Statistics for this paper

More papers in CEPR Discussion Papers from Centre for Economic Policy Research 33 Great Sutton Street, London EC1V 0DX, UK.
Bibliographic data for series maintained by CEPR ().