European Financial Markets after Emu: A Review of Recent Literature and Evidence (download PDF 203 Kb)

Anthony Bartzokas, September 2001.

Abstract
As financial transactions become more integrated, many governments and policy makers have been exploring how they can increase the breath of capital markets. Increasing emphasis has been placed in recent years to the approach that the financial system is an important mechanism directly linked to the performance of the real economy. This paper adopts a methodology, which combines the systemic approach to financial institutions and recent developments in the study of capital structure, investment decisions and technological change. The view that there are important interactions between financial systems and corporate performance leads to a systemic approach to corporate performance. The performance of manufacturing industries must be considered in the context of the overall structure of economies. Differences across countries in the structure of capital markets, industrial organisation aspects of manufacturing sectors and product markets are all closely interlinked. It is therefore impossible to consider significant changes in one independent of the others. In particular, policies which promote the adoption of specific forms of financial intermediation have to take account of the product and industrial organisation context within which they are being contemplated.

This paper has been prepared under the fifth EU Framework Programme,
Key Action: Improving the Socioeconomic Knowledge Base. [Contract No HPSE-CT-1999-00039]