Institutional Dynamics in EU Financial Systems

18 Pages Posted: 12 Jan 2020

See all articles by Elias Bengtsson

Elias Bengtsson

Halmstad University; University of Gothenburg - School of Business, Economics and Law

Date Written: December 20, 2019


This paper argues that the traditional dichotomous and static conceptualisations of financial systems fail explain how financial systems have changed as a result of transformative events (the 2007-2008 financial crisis in particular) and trends in recent decades. To shed light on developments in contemporary financial systems in the EU, this paper presents and analyses an index that seeks to capture the extent to which funding structures in non-financial companies subject them to financial pressures.

The index reveals that the EU as a whole is distinctly “bank-based”, in the sense of private equity and bank credit matter more for funding of non-financial companies than listed equity or market-based credit. However, the EU and its Member States have become more market-based over the last decade. While this trend generally holds true, there is also increasing divergence between European financial systems. Developments in individual countries appears to be determined by competitive advantage specialization as well as how strong the country was hit by the 2007-2008 financial crisis.

The paper thereby contributes to the comparative political economy literature on comparative financial systems, as well as the much neglected questions if, how and why institutional transformation in financial systems occur. It also contributes to the literature on how different national financial systems respond to economic shocks.

Keywords: Financial systems, varieties of capitalism, institutional transformation, financial crisis, corporate funding

Suggested Citation

Bengtsson, Elias, Institutional Dynamics in EU Financial Systems (December 20, 2019). Available at SSRN: or

Elias Bengtsson (Contact Author)

Halmstad University ( email )

301 18 Halmstad

University of Gothenburg - School of Business, Economics and Law ( email )

Vasagatan 1
Goteborg, 40530

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