Deepening European Financial Integration: Theoretical Considerations and Empirical Evaluation of Growth and Employment Benefits

This paper analyses the macroeconomic effects of further integration in the European markets for financial services. In particular we are interested in growth and unemployment benefits of the reduction and abolition of cross-border barriers impeding the entry into the market of banking and insurance products. Usually, it is argued that facilitating the entry of foreign financial firms into the local market intensifies competition, improves efficiency, and increases the quality of the financial infrastructure. As such, foreign firms can be seen as an important catalyst for the sort of financial development that promotes growth.