Heterogeneity and Change in European Financial Environments
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Paul Stoneman, November 2001.

Abstract
The main aim of this paper is to provide a background for other research relating to the impact of the financial environment on the diffusion of new technology in Europe. The issues addressed are: relative sizes and importance of banks and capital markets in the "financial sector" per se; the roles of banks and capital markets in how savers hold their wealth and how corporations fund their investments; corporate governance structures, comparing insider and outsider controlled governance systems; the business systems of firms; the financing of SMEs; and financial innovations per se. It is shown that in all these dimensions European financial environments are heterogeneous. It also clear that the European financial environment is in a process of change, reacting especially to the advent of EMU. The heterogeneity may well imply that firms behave differently in different countries. The changes over time may well imply that firm behaviour will be changing over time.