Financial integration, national savings and national investment in the EU member-states

Abstract

Financial integration in the EU is reflected in a lower correlation coefficient between national savings and national investment with different implications for “European South” and “European North” member-states.

Acknowledgements

The authors gratefully acknowledge helpful discussion and comments with Vassilis Droucopoulos and Heather Gibson. The usual disclaimer applies; remaining errors are, of course, our own.

Notes

¹ It should, of course, be remembered that the process of financial integration was a continuous one and did not start at the same time for all member-states. For the now financially ‘mature’ member-states it started in the 1970s, for others in the 1980s and in 1992, with the implementation of the European Internal Market. For a detailed description and analysis of the process of integration and financial liberalization, at least in the Southern European Countries, see Bliss and Macedo (1990) and Gibson and Tsakalotos (1992). Although the present paper is related to the vast literature developed following the seminal contribution of Feldstein and Horioka (1980), the emphasis is not on the Feldstein–Horioka ‘puzzle’, but on examining certain aspects of financial integration related to the above question.