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Financial centres' competitiveness and economic convergence: Evidence from the European Union regions

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  • Marta Degl'Innocenti
  • Roman Matousek
  • Nickolaos G Tzeremes

Abstract

This study analyses the gaps in financial centres' competitiveness and their impact on regional economic convergence in 23 European Union Member States during the period of the Global Financial Crisis. In particular, we explore the economic convergence and divergence patterns among regions from two different perspectives across the selected European Union Member States and within each country. From a methodological viewpoint, we apply a fully non-parametric framework to the club convergence model and address the endogeneity problem between financial centres' competitiveness and regional economic convergence. Our results show that the large and internationally-oriented financial centres experienced a diverging trend in terms of the competitiveness of financial centres' business environment during the peak of the crisis. We also find evidence that the convergence of financial centres reduces regional economic inequalities between the regions where financial centres are located. In contrast, the increase in the competitiveness of financial centres only serves to widen existing inequalities at the national level. Finally, we examine and discuss the impact of competitiveness drivers of financial centres on the convergence pattern of European Union regions.

Suggested Citation

  • Marta Degl'Innocenti & Roman Matousek & Nickolaos G Tzeremes, 2018. "Financial centres' competitiveness and economic convergence: Evidence from the European Union regions," Environment and Planning A, , vol. 50(1), pages 133-156, February.
    • Handle: RePEc:sae:envira:v:50:y:2018:i:1:p:133-156
    DOI: 10.1177/0308518X17740894
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    Cited by:

    1. Ignatov Augustin, 2019. "Institutional Efficiency, Entrepreneurship, and the Premises of Economic Development in the Eastern European Countries," Studia Universitatis Babeș-Bolyai Oeconomica, Sciendo, vol. 64(2), pages 12-32, August.
    2. Ioannou, Stefanos & Wójcik, Dariusz & Pažitka, Vladimír, 2021. "Financial centre bias in sub-sovereign credit ratings," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 70(C).
    3. Degl'Innocenti, Marta & Grant, Kevin & Šević, Aleksandar & Tzeremes, Nickolaos G., 2018. "Financial stability, competitiveness and banks' innovation capacity: Evidence from the Global Financial Crisis," International Review of Financial Analysis, Elsevier, vol. 59(C), pages 35-46.
    4. Jibuti Mariam, 2020. "Convergence and growth – conflicting goals of economics policy – A case study of Georgia," Environmental & Socio-economic Studies, Sciendo, vol. 8(1), pages 1-8, March.
    5. Holmes, Mark J. & Iregui, Ana María & Otero, Jesús, 2019. "Interest rate convergence across maturities: Evidence from bank data in an emerging market economy," The North American Journal of Economics and Finance, Elsevier, vol. 49(C), pages 57-70.
    6. Andrey A. Vorobyev & Irina S. Glebova & Liliya V. Khafizova, 2020. "Strategic Management System of the Territory as a Factor of Increasing Its Competitiveness Level in Financial Organizations," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 11(6), pages 219-225, December.

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