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Murinde, Victor, Agung, Juda and Mullineux, Andy W. (2004) 'Patterns of Corporate Financing and Financial System Convergence in Europe.' Review of International Economics, 12 (4). pp. 693-705.

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The paper investigates the possibility of convergence in the European Union (EU) in terms of the patterns of corporate financing by banks, bond markets, and stock markets; and in the context of whether the economies are converging towards an Anglo-Saxon (capital-market-oriented) or a continental (bank-oriented) financial system. GMM estimation of a dynamic fixed-effects model is implemented to test for conditional and unconditional convergence using a panel of flow of funds data for the period 1972–1996 for seven EU member countries. It is found that the pattern of corporate financing is consistent with the pecking order theory of financing choices. Overall, the evidence suggests convergence of the EU financial systems on a variant of the Anglo-Saxon model, depicting heavy reliance on internal financing as well as direct financing via equity and bond markets, while bank debt is becoming relatively less important.

Item Type: Journal Article
SOAS Departments & Centres: Legacy Departments > Faculty of Law and Social Sciences > School of Finance and Management
ISSN: 09657576
DOI (Digital Object Identifier):
Date Deposited: 21 May 2017 16:59

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