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Financial Harmonization and Industrial Growth : Evidence from the European Union

Author

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  • Ozkok, Zeynep

    (St. Francis Xavier University)

Abstract

This study analyzes the growth effects of the Financial Services Action Plan of the European Commission, a set of directives that aim to harmonize European financial markets. Using a panel of 25 countries and 30 industries, we find that the standard specification predicts lower growth due to harmonization, though the negative effect is mitigated for industries that depend more on external finance. Controlling for the relative timing of the adoption, harmonization is shown to have a positive effect on growth. This finding is robust to including further controls, to splitting the sample into subgroups of countries, and to extending the model to a dynamic setting.

Suggested Citation

  • Ozkok, Zeynep, 2017. "Financial Harmonization and Industrial Growth : Evidence from the European Union," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 32(2), pages 244-282.
    • Handle: RePEc:ris:integr:0712
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    More about this item

    Keywords

    Financial Integration; Legal; Regulatory Harmonization; External Finance Dependence; European Union; FSAP;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • F55 - International Economics - - International Relations, National Security, and International Political Economy - - - International Institutional Arrangements
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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