Article

 

Corporate Financing and Contribution to Economic Growth: Promoting financial market integration. An empirical approach (p.11-32)

by

Borut Vojinovič, PhD.(Econ.), Senior Lecturer, GEA College (Ljubljana, Slovenia)

Keywords : Financial development, Economic growth, Industry-level, Banks, Investor protection

JEL classification : F30, F33, G15, P20

Abstract

This paper provides estimates of the relationship between financial market development and corporate growth and assesses the impact of financial market integration on this relationship with reference to European Union (EU) countries. The regression results obtained using this panel support the hypothesis that financial development promotes growth, particularly in industries that are financially more dependent on external finance. The assumption that EU countries will raise its regulatory and legal standards to the U.S. standards appears unrealistic; therefore we studied a scenario with EU countries raising their standards to the highest current EU standard.