 Finance and growth in the EU: new evidence from the liberalisation and harmonisation of the banking industryDiego Romero De Ãvila No 266, Working Paper Series from European Central Bank Abstract: This paper analyses the link between finance and growth by studying the effect that the process of financial deregulation and harmonisation of banking laws at the EU level has brought about on growth over the last 40 years. Our main findings point to the existence of a positive long-run growth impact from the liberalisation of capital controls and the harmonisation of banking legislation. Both policy changes affect growth even after controlling for other pro-growth policies implemented around the same time and they are robust to business cycle effects that could spuriously drive the relation. The analysis of the main channels through which our policy changes may have affected growth indicates that the harmonisation process has impacted growth through the increase in the level and efficiency of financial intermediation and the liberalisation of capital controls has mainly affected growth through improvements in the degree of efficiency in financial intermediation. JEL Classification: G21, G28, O5 Keywords: banking deregulation; economic growth; European Union; financial development (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:2003266 Access Statistics for this paper More papers in Working Paper Series from European Central Bank 60640 Frankfurt am Main, Germany. Contact information at EDIRC. |
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