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Financial Structure, Investment and Growth of the EU Non-Financial Sector

Author

Listed:
  • Esposito Piero

    (University of Cassino and Southern Lazio; European University of Technology)

  • Larocca Vittorio

    (Ministry of Economy)

  • Messori Marcello

    (Schumann Center, European University)

  • Mischitelli Manuela

    (Ministry of Economy and Finance)

Abstract

This paper tests the neutrality view for the Non-Financial Corporations (NFC) sector in the European Union (EU) between 2000 and 2021. We investigate how market-based and bank-based finance can affect Investment and Value-Added performance within this sector. We use a Panel VAR specification to account for the time profile in the response of performance indicators. Our evidence indicates that market-based finance stimulates Value-Added and investment growth in the EU's advanced economies, mainly in Intellectual Property Products. In Eastern and South-Eastern member states, investment growth, especially in tangible goods, is stimulated by bank finance. In this group, market-based finance plays an important role for intangible investment. Three main implications emerge. First, the neutrality view does not hold; second, the economic and financial systems of the various EU countries are characterized by deep differences; third, implementing the Capital Market Union alongside the Banking Union will remain a key priority in the EU.

Suggested Citation

  • Esposito Piero & Larocca Vittorio & Messori Marcello & Mischitelli Manuela, 2026. "Financial Structure, Investment and Growth of the EU Non-Financial Sector," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 41(2), pages 159-186, June.
    • Handle: RePEc:ris:integr:022612
    DOI: 10.11130/jei.2025021
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    Keywords

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    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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