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Financial Integration and Growth -Is Emerging Europe Different?

Christian Friedrich (), Isabel Schnabel () and Jeromin Zettelmeyer ()

No 1013, Working Papers from Gutenberg School of Management and Economics, Johannes Gutenberg-Universität Mainz

Abstract: Using industry-level data, this paper shows that the European transition region benefited much more strongly from financial integration in terms of economic growth than other developing countries in the years preceding the current crisis. We analyze several factors that may explain this finding: financial development, institutional quality, trade integration, political integration, and financial integration itself. The explanation that stands out is political integration. Within the group of transition countries, the effect of financial integration is strongest for countries that are politically closest to the EU. This suggests that political and financial integration are complementary and that political integration can considerably increase the benefits of financial integration.

Keywords: Financial integration; political integration; economic growth; parent banking; European transition economies (search for similar items in EconPapers)
JEL-codes: E43 E52 E58 D44 (search for similar items in EconPapers)
Pages: 52 pages
Date: 2010-11-17, Revised 2010-11-17
New Economics Papers: this item is included in nep-eec, nep-fdg, nep-ifn, nep-opm and nep-tra
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https://download.uni-mainz.de/RePEc/pdf/Discussion_Paper_1013.pdf First version, 2010 (application/pdf)

Related works:
Journal Article: Financial integration and growth — Why is Emerging Europe different? (2013) Downloads
Working Paper: Financial Integration and Growth - Is Emerging Europe Different? (2010) Downloads
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