IDEAS home Printed from https://ideas.repec.org/a/kap/decono/v172y2024i2d10.1007_s10645-024-09434-6.html
   My bibliography  Save this article

Convergence and Capital Flows in Europe: The Role of Financial Intermediation and Investor Quality

Author

Listed:
  • Rémy Lecat

    (Banque de France)

  • Dorothée Pasquier de Franclieu

    (Banque de France)

Abstract

Economic convergence was a goal of the European Union and financial integration was part of the tools to achieve this goal. After decades of successful convergence and closer financial integration, these movements have slowed since the Great Financial Crisis. In this paper, we contribute to explaining these stylized facts by showing, in a country panel setting, with 2SLS estimates, that the positive impact on productivity growth of financial flows, and in particular those intermediated by the banking system, depends on the quality of financial intermediation in the recipient country, but also on the quality of investors in the investor countries.

Suggested Citation

  • Rémy Lecat & Dorothée Pasquier de Franclieu, 2024. "Convergence and Capital Flows in Europe: The Role of Financial Intermediation and Investor Quality," De Economist, Springer, vol. 172(2), pages 101-119, June.
    • Handle: RePEc:kap:decono:v:172:y:2024:i:2:d:10.1007_s10645-024-09434-6
    DOI: 10.1007/s10645-024-09434-6
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10645-024-09434-6
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s10645-024-09434-6?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Cette, Gilbert & Fernald, John & Mojon, Benoît, 2016. "The pre-Great Recession slowdown in productivity," European Economic Review, Elsevier, vol. 88(C), pages 3-20.
    2. Philip R. Lane & Peter McQuade, 2014. "Domestic Credit Growth and International Capital Flows," Scandinavian Journal of Economics, Wiley Blackwell, vol. 116(1), pages 218-252, January.
    3. M Ayhan Kose & Eswar Prasad & Kenneth Rogoff & Shang-Jin Wei, 2009. "Financial Globalization: A Reappraisal," IMF Staff Papers, Palgrave Macmillan, vol. 56(1), pages 8-62, April.
    4. Gita Gopinath & Şebnem Kalemli-Özcan & Loukas Karabarbounis & Carolina Villegas-Sanchez, 2017. "Capital Allocation and Productivity in South Europe," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 132(4), pages 1915-1967.
    5. Philip R. Lane & Gian Maria Milesi-Ferretti, 2008. "The Drivers of Financial Globalization," American Economic Review, American Economic Association, vol. 98(2), pages 327-332, May.
    6. Galor, Oded, 1996. "Convergence? Inferences from Theoretical Models," Economic Journal, Royal Economic Society, vol. 106(437), pages 1056-1069, July.
    7. Antonin Bergeaud & Gilbert Cette & Rémy Lecat, 2016. "Productivity Trends in Advanced Countries between 1890 and 2012," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 62(3), pages 420-444, September.
    8. Robert J. Barro, 2015. "Convergence and Modernisation," Economic Journal, Royal Economic Society, vol. 125(585), pages 911-942, June.
    9. Tamim Bayoumi & Giorgio Fazio & Manmohan Kumar & Ronald MacDonald, 2007. "Fatal attraction: Using distance to measure contagion in good times as well as bad," Review of Financial Economics, John Wiley & Sons, vol. 16(3), pages 259-273.
    10. Byrne, Joseph P. & Fiess, Norbert, 2016. "International capital flows to emerging markets: National and global determinants," Journal of International Money and Finance, Elsevier, vol. 61(C), pages 82-100.
    11. Antonin Bergeaud & Gilbert Cette & Rémy Lecat, 2020. "Convergence of GDP per capita in advanced countries over the twentieth century," Empirical Economics, Springer, vol. 59(5), pages 2509-2526, November.
    12. Cezar, Rafael & Silvestrini, Maéva, 2021. "Impact of the ECB Quantitative Easing on the International Investment Position," International Economics, Elsevier, vol. 165(C), pages 241-263.
    13. M Ayhan Kose & Eswar Prasad & Kenneth Rogoff & Shang-Jin Wei, 2009. "Financial Globalization: A Reappraisal," IMF Staff Papers, Palgrave Macmillan, vol. 56(1), pages 8-62, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bank for International Settlements, 2021. "Changing patterns of capital flows," CGFS Papers, Bank for International Settlements, number 66, October –.
    2. Savina Gygli & Florian Haelg & Niklas Potrafke & Jan-Egbert Sturm, 2019. "The KOF Globalisation Index – revisited," The Review of International Organizations, Springer, vol. 14(3), pages 543-574, September.
    3. Monacelli, Tommaso & Sala, Luca & Siena, Daniele, 2023. "Real interest rates and productivity in small open economies," Journal of International Economics, Elsevier, vol. 142(C).
    4. Brunnermeier, Markus & De Gregorio, José & Eichengreen, Barry & El-Erian, Mohamed & Fraga, Arminio & Ito, Takatoshi & Lane, Philip R. & Pisani-Ferry, Jean & Prasad, Eswar & Rajan, Raghuram & Ramos, Ma, 2012. "Banks and cross-border capital flows: challenges and regulatory responses," LSE Research Online Documents on Economics 102439, London School of Economics and Political Science, LSE Library.
    5. Beine, Michel & Lodigiani, Elisabetta & Vermeulen, Robert, 2012. "Remittances and financial openness," Regional Science and Urban Economics, Elsevier, vol. 42(5), pages 844-857.
    6. Boikos, Spyridon & Panagiotidis, Theodore & Voucharas, Georgios, 2022. "Financial development, reforms and growth," Economic Modelling, Elsevier, vol. 108(C).
    7. Paul Bouche & Gilbert Cette & Rémy Lecat, 2021. "News from the Frontier: Increased Productivity Dispersion across Firms and Factor Reallocation," Review of Economics and Institutions, Università di Perugia, vol. 12(2).
    8. Han, Minsoo, 2022. "International financial integration and total factor productivity losses from underdeveloped domestic financial markets," Economics Letters, Elsevier, vol. 212(C).
    9. Brahim Gaies & Stéphane Goutte & Khaled Guesmi, 2019. "Does Financial Globalization Still Spur Growth In Emerging And Developing Countries? Considering Exchange Rate Volatility'S Effects," Working Papers hal-01968082, HAL.
    10. Antonin Bergeaud & Gilbert Cette & Rémy Lecat, 2020. "Convergence of GDP per capita in advanced countries over the twentieth century," Empirical Economics, Springer, vol. 59(5), pages 2509-2526, November.
    11. Gehringer, Agnieszka, 2012. "Financial liberalization, growth, productivity and capital accumulation: The case of European integration," University of Göttingen Working Papers in Economics 134, University of Goettingen, Department of Economics.
    12. Al-Abri, Almukhtar & Baghestani, Hamid, 2015. "Foreign investment and real exchange rate volatility in emerging Asian countries," Journal of Asian Economics, Elsevier, vol. 37(C), pages 34-47.
    13. Soyoung Kim & Sunghyun Kim & Yoonseok Choi, 2018. "International capital mobility: regional versus global perspective," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 154(1), pages 157-176, February.
    14. Mehl, Arnaud, 2013. "Large global volatility shocks, equity markets and globalisation: 1885-2011," Working Paper Series 1548, European Central Bank.
    15. Arribas, Iván & Peiró-Palomino, Jesús & Tortosa-Ausina, Emili, 2020. "Is full banking integration desirable?," Journal of Banking & Finance, Elsevier, vol. 112(C).
    16. Ian Goldin & Pantelis Koutroumpis & François Lafond & Julian Winkler, 2024. "Why Is Productivity Slowing Down?," Journal of Economic Literature, American Economic Association, vol. 62(1), pages 196-268, March.
    17. repec:wsr:wpaper:y:2012:i:086 is not listed on IDEAS
    18. Saif Al-Abri, Almukhtar, 2014. "How does terms-of-trade behavior shape international financial integration in primary-commodity exporting economies?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 33(C), pages 335-353.
    19. Bechlioulis, Alexandros & Economidou, Claire & Karamanis, Dimitrios & Konstantios, Dimitrios, 2023. "How important are capital controls in shaping innovation activity?," Journal of International Money and Finance, Elsevier, vol. 131(C).
    20. Hwa, Tng Boon & Raghavan, Mala & Huey, Teh Tian, 2017. "Macro-financial effects of portfolio flows: Malaysia’s experience," Working Papers 2017-07, University of Tasmania, Tasmanian School of Business and Economics.
    21. Stijn Claessens, 2017. "Global Banking: Recent Developments and Insights from Research," Review of Finance, European Finance Association, vol. 21(4), pages 1513-1555.

    More about this item

    Keywords

    Convergence; Capital flows; Productivity; European union;
    All these keywords.

    JEL classification:

    • F3 - International Economics - - International Finance
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:decono:v:172:y:2024:i:2:d:10.1007_s10645-024-09434-6. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.