-A third study conducted for the European Commission provides evidence that financial market integration could deliver sizeable growth benefits within the manufacturing industry for the EU ranging between 0.7 to 0.9 percentage points higher per annum on a persistent basis. Legal and accounting standards are found to be an important contributor to financial development.
The study provides a thorough assessment of the likely effects of financial market integration on the ability of European countries to grow faster and on how the possible benefits will be distributed among the Community countries and industries. The main findings of the study can be summarized as follows:
European countries still differ considerably in the degree of financial development.
Domestic financial backwardness constrains manufacturing industry growth below its
potential.
Access to a financial market similar to the U.S. standards can lead to a growth of the EU manufacturing industry between 0.75 to 0.94 percentage points per year.
The overall impact hides considerable diversity in country and sector growth because of their initial level of financial development and differs also according with regard to manufacturing firms’ growth to firm size.
Convergence in accounting standards to the highest level in Europe is shown to be alone sufficient to raise growth substantially.
Study
Commission press release
© European Commission
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