Financialisation Level of Non-Financial Enterprises in European Union Countries: A Comparative Analysis

Ryszard Kata, Justyna Chmiel
European Research Studies Journal, Volume XXIII, Issue 3, 378-398, 2020
DOI: 10.35808/ersj/1644

Abstract:

Purpose: The main aim of this article is to measure and compare the level of financialisation of enterprises in the European Union countries and determine the correlation between this process and the size of the financial sector, measured by the ratio of its assets to GDP. Approach/Methodology/Design: An analysis of the differentiation in the level of financialisation of non-financial enterprises in the EU was made, and the scale and direction of changes in this process between 2009 and 2018 were determined. The analysis uses a synthetic indicator of enterprise finalization (SIEF) that allows assessing the level of this phenomenon in non-financial entities. The taxonomic standard method was used in the construction of the indicator. The source of empirical materials for research were the financial data of companies, from 2009-2018, derived from the pan-European database of financial statements of the companies "Amadeus". Findings: It has been shown that the average level of enterprises’ finalization in the EU countries measured by the synthetic SIEF index is varied, but in most EU countries the scale of this variation did not change significantly between 2009 and 2018. In the analyzed period, the SIEF index fell in almost all EU countries and the trend concerned both countries that had a relatively high level of SIEF in 2009 and countries with a low level of this indicator. Practical Implications: The synthetic SIEF indicator presented in the study may be a useful tool for international, regional or industry comparative analyses of the degree of finalization of non-financial enterprises. Originality/Value: Most of the scientific studies on financialisation focus on the financial sector and the importance of this process for the entire economy and the stability of the financial sector. Therefore, the macroeconomic approach dominates. The value of this study is the microeconomic approach, i.e., examining the process of enterprise financing based on economic and financial data obtained from companies' financial reporting. A comparative analysis of the level of finalization and its changes in 2009-2018 in individual EU countries used in the study may constitute the basis for further in-depth research on the determinants of this phenomenon.


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