Franklin Allen - Capital Markets Union and Beyond

Capital Markets Union and Beyond

Franklin Allen, Ester Faia, Michael Haliassos, and Katja Langenbucher

The MIT Press

Cambridge, Massachusetts

London, England

2019 Massachusetts Institute of Technology

All rights reserved. No part of this book may be reproduced in any form by any electronic or mechanical means (including photocopying, recording, or information storage and retrieval) without permission in writing from the publisher.

This book was set in Times New Roman by Westchester Publishing Services, Danbury, CT. Printed and bound in the United States of America.

Library of Congress Cataloging-in-Publication Data

Names: Allen, Franklin, 1956- editor.

Title: Capital markets union and beyond / [edited by] Franklin Allen, Ester Faia, Michael Haliassos, and Katja Langenbucher

Description: Cambridge, MA : MIT Press, [2019] | Includes bibliographical references and index.

Identifiers: LCCN 2018056264 | ISBN 9780262042765 (hardcover : alk. paper)

Subjects: LCSH: Capital market--Europe. | Finance--Europe. | Monetary unions--Europe. | Europe--Economic integration.

Classification: LCC HG5422 .C37 2019 | DDC 332/.0415094--dc23

LC record available at https://lccn.loc.gov/2018056264

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Contents

Franklin Allen and ubo Pstor

Diego Valiante

Claudia M. Buch and Franziska Bremus

Eilis Ferran

Geert Bekaert, Campbell R. Harvey, Christian T. Lundblad, and Stephan Siegel

Marco Pagano

Jeffrey N. Gordon and Kathryn Judge

Michael Haliassos and Alexander Michaelides

Giorgio Barba Navaretti, Giacomo Calzolari, Gianmarco Ottaviano, and Alberto Franco Pozzolo

Susanne Kalss

Alain Pietrancosta

Ester Faia and Monica Paiella

Ugo Albertazzi

John Armour and Luca Enriques

Katja Langenbucher

Marina Brogi and Valentina Lagasio

Giovanna Nicodano

Sumit Agarwal, Gene Amromin, Itzhak Ben-David, Souphala Chomsisengphet, and Douglas D. Evanoff

Massimo Marchesi and Mario Nava

Claudio Borio

Lorenzo Bini Smaghi and Michala Marcussen

Emanuel Moench

Richard Portes

Wolf-Georg Ringe

Chris Thomale

Valentina Allotti, Marcello Bianchi, and Stefano Micossi

List of Figures

Changes in the financial development indexes, pre- and post-crisis. Pre denotes pre-crisis averages (20002007); post denotes post-crisis averages (20092014). Sources: Svirydzenka 2016; authors own calculations.

Share of equity in external assets and liabilities. Gray = Sample mean of euro area countries, Black = Noneuro area OECD countries. Dashed lines are sample means +/ one standard deviation. Equity is defined as portfolio equity assets plus FDI here. Assets (liabilities) are total external assets (liabilities). Sources: External wealth of nations dataset by Lane and Milesi-Ferretti (2017); authors own calculations.

Benchmarking segmentation: full sample, 19902007 (annual frequency). Note: This figure presents average bilateral segmentation between 1990 and 2007 for all EU and non-EU country-pairs. For comparison, the figure shows the average US benchmark segmentations level (constructed for the set of all European countries) together with a 90% confidence interval.

Price-based and quantity-based financial integration composite indicators. Sources: ECB and ECB calculations.

Securities to loans ratio for the United States and Europe, 18501978. Source: Raymond Goldsmith, Comparative National Balance Sheets: A Study of Twenty Countries, 16881978 (Chicago: University of Chicago Press, 1985).

Evolution of the fraction of gross fixed-capital formation raised via equity. Note: The fraction of gross fixed-capital formation raised via equity is the amount of funds raised through initial public offerings and seasoned equity issuances by domestic corporations divided by gross fixed-capital formation (a loose proxy for the total investments of domestic corporations). Source: Raghuram Rajan and Luigi Zingales, The Great Reversals: The Politics of Financial Development in the Twentieth Century, Journal of Financial Economics 69 (2003): 550.

Loans by financial institutions/GNP for the United States and Europe, 18051978. Source: Raymond Goldsmith, Comparative National Balance Sheets: A Study of Twenty Countries, 16881978 (Chicago: University of Chicago Press, 1985).

Debt securities/GNP for the United States and Europe, 18501978. Source: Raymond Goldsmith, Comparative National Balance Sheets: A Study of Twenty Countries, 16881978 (Chicago: University of Chicago Press, 1985).

Five-firm concentration ratios across the United States, 18001914. This figure displays the ratio of either assets or deposits at the five largest banks to the total at all other banks. See Caroline Fohlin and Matthew Jaremski, Bank Concentration in the United States, 18001914 (draft, December 2015, on file with the authors), appendix A for a description of the data sources.

Five-bank asset concentration for the United States, 19962016. Note: Shaded areas indicate US recessions. Source: World Bank, 5-Bank Asset Concentration for United States [DDOI06USA156NWDB], retrieved from FRED, Federal Reserve Bank of St. Louis, https://fred.stlouisfed.org/series/DDOI06USA156NWDB.

Concentration of US banking system. Note: Total assets of top three US banks as percent of total commercial banking sector assets. Source: Andrew Haldane, Thomas Reuters Datastream, as published in Martin Wolf, The Challenge of Halting the Financial Doomsday Machine, Financial Times, April 20, 2010, https://www.ft.com/content/f2e4dbb0-4caa-11df-9977-00144feab49a.

Participation differences between Swedes and immigrants, controlling for household characteristics. Difference in stock market participation rates and in homeownership rates, respectively, between native Swedes and members of the cultural group are indicated. Differences control for household characteristics and are plotted against length of stay in Sweden. For corresponding countries of origin, see Haliassos, Jansson, and Karabulut (2017).

Share of employment by firm size and by country, averages between 2001 and 2010 (except a few countries for which data are not available during the whole sample period). Source: Criscuolo, Gal, and Menon (2014).

Contribution of young and small SMEs to job creation and destruction. Source: Criscuolo, Gal, and Menon (2014).

Three-year survival and growth performance of micro start-ups. Source: Criscuolo, Gal, and Menon (2014).

Employment growth averages between 2013 and 2015. Source: European Central Bank (2018).

Ownership structure of SMEs. Data refer to October 2017. Source: European Central Bank (2018).

Relevance of sources of funding. Share of firms that answered that the specific source of financing is relevant; that is, that it has been used in the past or has been considered to be used in the future. Source: European Central Bank (2018).

Firm leverage. Share of equity to total liabilities in 2016. Source: Eurostat (n.d.).

Relevance of different sources of financing. Share of firms that answered that the specific source of financing is relevant; that is, that it has been used in the past or has been considered to be used in the future. Source: European Central Bank (2018).