Focus on European Economic Integration Q3/20

Downloads

• Focus on European Economic Integration Q3/20 (PDF, 13.4 MB) August 2020

Studies and Analyses

• Call for applications: Klaus Liebscher Economic Research Scholarship (PDF, 65 kB) en Aug 31, 2020, 12:00:00 AM

• A sleeping beauty or a dead duck? The state of capital market development in CESEE EU Member States (PDF, 1.3 MB) Reininger, Walko. For quite some while, there have been high expectations that stronger capital markets could generate a broader range of financing sources and reduce the buildup of vulnerabilities for the corporate sector in European Union Member States in Central, Eastern and Southeastern Europe (CESEE). These expectations prompted various supportive measures by international institutions, national authorities and market participants over the past 10 to 15 years. However, despite these efforts, capital market developments in the region have been far from dynamic over the past decade. Capital markets continue to be substantially less developed than in the euro area and the U.S.A., judging from the balances of debt securities, listed shares and investment fund shares outstanding both in relation to GDP and as a share of total financial liabilities. Even taken together, these three types of securities account for a smaller portion of total financial liabilities than loans, with loan penetration levels (loans as a percentage of GDP) already approaching euro area and U.S. levels. Data on financial flows show narrower gaps with the euro area for funding via debt securities, but issuance is dominated by government entities. Analyzing the financial liabilities of nonfinancial corporations, we find some relevance for listed shares only in Poland and Croatia (but less of a relevance than in the euro area) and a negligible role for debt securities (with the euro being the dominant issuing currency in most non-euro area CESEE EU Member States). The predominantly bank-based nature of the financial systems of the CESEE EU Member States is also confirmed by the fact that the total assets of nonbank financial institutions are well below the level of domestic bank credit to the private sector, thus playing a relatively smaller role in financial intermediation than in the euro area and the U.S.A. In view of this evidence, we review the key factors which have so far prevented a more dynamic development, describe major efforts undertaken to overcome these detrimental factors and synthesize proposals by various institutions for future action to deepen local capital markets in the region, including in the context of the European Union’s capital markets union. en CESEE, capital markets, financial intermediation, European Union, capital markets union D14, D18, D31, D63, E44, G21, G28, H81 Aug 31, 2020, 12:00:00 AM

• How financially literate is CESEE? Insights from the OeNB Euro Survey (PDF, 4.8 MB) Beckmann, Reiter. Drawing on data from the OeNB Euro Survey, we document financial literacy across ten countries in Central, Eastern and Southeastern Europe (CESEE-10) between 2012 and 2018. We analyze people’s understanding of the “big three” concepts of financial literacy: interest rates, inflation and risk diversification. We show that financial literacy differs across and within countries. On average, just one in five adults can be considered financially literate. Our results show that low financial literacy levels are more common among older and less educated individuals and that self-employment is only weakly related to higher literacy. In line with previous research, females show lower levels of financial literacy than their male counterparts. However, the gender gap observed in the CESEE-10 (countries with a communist legacy) is small compared to the gap in countries that do not have a communist legacy. Individuals who experienced economic turbulence during transition from planned to market economies tend to be more financially literate regarding inflation. While indicators of economic and financial development are correlated with higher financial literacy at the country level, interactions are more complex at the intracountry level. en financial literacy, interest rates, inflation, risk diversification, gender gap, CESEE D14, D83, D91, G53 Aug 31, 2020, 12:00:00 AM

• Online supplement to "How financially literate is CESEE? Insights from the OeNB Euro Survey" (PDF, 413 kB) Beckmann, Reiter. de Aug 31, 2020, 12:00:00 AM

• Typology of multinationals in Austria: CESEE focus and foreign control as distinct features (PDF, 5.5 MB) Cernohous, Slacík. Multinational enterprises (multinationals) play an important role in every economy as they tend to be larger, more capital- and R&D-intensive, more productive and more integrated in global value chains than domestic enterprises. Focusing on multinationals active in Austria, this paper discusses essentially two research questions: Can we categorize Austrian units of multinationals in consistent groups? And can these groups be characterized by meaningful variables? To address these questions, we undertake a microdata-linking exercise to build a comprehensive dataset of multinationals in Austria and use adequate clustering techniques to identify homogeneous and distinct groups without imposing any prior knowledge regarding the number of such groups or their features. This approach enables us to characterize more than 2,500 multinationals in Austria and meaningfully identify eight types of multinationals, the main grouping factors being (1) foreign or Austrian control, (2) special purpose entity versus other form of company, (3) the share of outward investment in Central, Eastern and Southeastern Europe (CESEE) and (4) the degree of trade openness. With this basic research work, we open up a wide range of questions that may serve as the basis for future (applied) analytical work en multinational enterprises, cluster analysis, globalization, partitioning around medoids, typology C49, F13, F14, F15, F21, F36, F41 Aug 31, 2020, 12:00:00 AM

• A CESEE conundrum: low trust in government but high hopes for government-led job creation (PDF, 690 kB) Eller, Scheiber. OeNB Euro Survey results for ten countries in Central, Eastern and Southeastern Europe (CESEE) from 2018 indicate that a major share of respondents is disappointed with public governance. Yet, while trust in national governments is lacking, there is still a widespread belief that creating jobs is primarily a state responsibility, even 30 years after the onset of transition. As shown by a series of probit regressions, respondents are more likely to consider job creation to be above all a state responsibility if they belong to a low-income household, have comparatively little wealth and comparatively little education, rely on welfare payments, have worked for the public sector or reside outside the capital city. The views of respondents who express a lack of trust in government are also colored strongly by past economic hardship experiences. While there is, of course, a limit to how big the welfare state can get, our survey results imply that there is a case for national governments to build up buffers to be able to tide people over when incomes dry up in crisis episodes, and to invest more in developing human capital and improving social inclusion to address the concerns of marginalized societal groups. en public preferences, trust in government, government-led job creation, survey data, CESEE A13, H11, P35 Aug 31, 2020, 12:00:00 AM

• CESEE-related abstracts from other OeNB publications (PDF, 106 kB) en Aug 31, 2020, 12:00:00 AM