Table of Contents

Economic Convergence and Divergence in Europe

Economic Convergence and Divergence in Europe

Growth and Regional Development in an Enlarged European Union

Edited by Gertrude Tumpel-Gugerell and Peter Mooslechner

This highly topical book addresses the challenge of economic convergence within Europe, beginning with a thorough review of the theory of growth and related empirical research. Historical and more recent economic developments within the present EU and current accession countries are discussed, along with the design for the process of further integration of accession countries into the EU and the Euro area. Moreover, the potential to achieve a sustainable catch-up process in Western Balkan countries, the Ukraine and Russia is explored, focusing on the task facing the EU in designing proper policies vis-à-vis these countries. The contributors’ varied perspectives ensure that the theories and policies postulated are linked closely with the actual situation in accession countries and offer up-to-date insights.

Chapter 20: Financial sector convergence in Europe

Andy Mullineux and Victor Murinde

Subjects: economics and finance, regional economics, urban and regional studies, regional economics

Extract

Andy Mullineux and Victor Murinde 20.1. INTRODUCTION Any attempt to assess the convergence of the financial sectors of ‘accession countries’ on the EU financial sector faces an immediate fundamental difficulty. This is because the ultimate shape of the EU financial sector is itself unknown. The single market in financial services is far from complete, since numerous tax and regulatory impediments remain. Further, the full impact of the introduction of the euro in January 1999 has yet to be seen and will of course be greater when (eventually) the UK, and hence ‘The City’ is integrated into a single European financial space. The initial impact of the euro was to induce more rapid growth of the corporate bond markets. Other drivers of change include pension privatization. The progressive replacement of ‘pay as you go’ pension schemes with funded schemes will accelerate the development of capital markets in Europe by creating a longterm demand for capital market instruments (bonds and equities). Thus, in assessing convergence, we face a moving target when answering the question ‘convergence on what?’. Financial sector restructuring in the EU member states is progressing at varying paces from historical structures that differ considerably. It is indeed possible that some of the accession countries will prove to be the ‘tortoises’ that arrive at the ultimate structure ahead of some, perhaps even all, of the current member state ‘hares’, whose progress is in fits and starts and who often focus the opposition of vested interest groups. The ‘tortoises’...

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