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Financial Development and Corporate Growth in the EU Single Market
Author(s) -
BENA JAN,
JURAJDA ŠTĚPÁN
Publication year - 2011
Publication title -
economica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.532
H-Index - 65
eISSN - 1468-0335
pISSN - 0013-0427
DOI - 10.1111/j.1468-0335.2009.00822.x
Subject(s) - business , diversity (politics) , financial market , financial system , value (mathematics) , market development , finance , economics , market economy , machine learning , sociology , anthropology , computer science
The establishment of the EU‐15 ‘single market’ in 1993 brought about a high degree of similarity in firms' growth opportunities across countries, while substantial diversity existed in the development of national financial markets. We compare within‐industry growth rates of similar ‘single market’ firms facing financial systems of different depth and institutional quality as of 1993. Moving from the least to the most developed financial market within the EU‐15 boosts firms' annual value‐added growth by about three percentage points. Our results also suggest that the growth gap due to initially underdeveloped financial systems was closed by 2003.