European Financial Systems in the New Millennium: Convergence or Bubble?

20 Pages Posted: 1 Aug 2018

See all articles by Emilio Barucci

Emilio Barucci

Politecnico di Milano - Department of Mathematics

Tommaso Colozza

Polytechnic University of Milan - Department of Mathematics

Date Written: July 12, 2018

Abstract

We investigate the financial crisis as a cut-off point in the evolution of financial systems in the European Union and in their convergence process. The crisis marked a turning point in the growth of banks and in the leveraging process of the economy. The evolution of financial systems in the new millennium is not characterized by a convergence process towards a specific financial system. More properly, the dynamics can be interpreted as a credit-driven bubble that collapsed with the crisis, yielding a de-leveraging process in the economy. Along this path, there is some evidence of convergence across European countries, mostly before the crisis.

Keywords: Financial Systems, Convergence, Crisis, Leverage

JEL Classification: F36, G01, G10

Suggested Citation

Barucci, Emilio and Colozza, Tommaso, European Financial Systems in the New Millennium: Convergence or Bubble? (July 12, 2018). Available at SSRN: https://ssrn.com/abstract=3212861 or http://dx.doi.org/10.2139/ssrn.3212861

Emilio Barucci

Politecnico di Milano - Department of Mathematics ( email )

Piazza Leonardo da Vinci
Milan, Milano 20100
Italy

Tommaso Colozza (Contact Author)

Polytechnic University of Milan - Department of Mathematics ( email )

Piazza Leonardo da Vinci
Milan, Milano 20100
Italy

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