Acta Universitatis Danubius. Œconomica, Vol 11, No 4 (2015)

Integration between the Romanian and the euro area financial markets and its impact on the growth rate of Romanian listed companies

Maricica Moscalu


Objectives: The paper aims at investigating the impact of integration between the Romanian and the euro area financial markets, with focus on the banking and stock market segments, on the growth rate of Romanian listed firms. Prior work: Previous research has showed that financial integration accelerates growth especially for firms acting in industries more dependent on external finance. Approach: The paper uses quarterly firm-level data and a panel fixed effects model in order to control for firm heterogeneity. The model specification controls for firm-level attributes and the development in the two segments of the domestic financial market. Results: The paper brings evidence on the significant impact of financial integration on firms’ growth with regard to both price- and volume-based measures. Integration in banking markets positively impacts on growth while integration in stock markets seems to tighten firm’s growth opportunities. Additionally, the Gibrat’s law is rejected. Implications: The findings have implications on researchers and Romanian policy makers alike. They call for action to deepen the integration in the banking markets. Value: the paper contributes to the debate on the relationship between financial development and financial integration respectively, on growth in an emerging economy.


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