European Financial Systems in the New Millennium: Convergence or Bubble?
20 Pages Posted: 1 Aug 2018
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: Suggested Citation