Figures and Tables
Figure 1: State aids in the European Union
European Union aggregate value of cumulated state aids used (a) and approved (b) divided by the total assets of European financial institutions. State aids are decomposed into financial guarantees (guar), recapitalizations (recap), impaired assets reliefs (assrel) and other liquidity measures (othliq).
Figure 2: Macroeconomic indicators in the European Union
Cross-country distribution of yearly growth rates (%) of gross domestic product (a) and gross fixed capital formation (b). Red lines show median values, blue boxes provide the interval between 25 and 75 percentiles, and the black whiskers extend to 95% of cross-country distribution.
Figure 3: Financial channels of non-financial companies
Shares, bonds and bank loans of non-financial companies as percentage of total assets of financial institutions (a) and as mutual percentages of their aggregate sum (b).
Figure 4: Financial variables
Cross-country distribution of yearly growth rates (%) of the amount of securities of non-financial companies (a), of the amount of loans granted to non-financial companies (b) and of each country’s main stock index (c). Red lines show median values, blue boxes provide the interval between 25 and 75 percentiles, and the black whiskers extend to 95% of cross-country distribution.
Figure 4: Response of the system to a unit impulse on aids
Impulse-response function based on the panel vector autoregression (4). The charts represent the response of the first difference of the growth rate of gross domestic product, of the growth rate of the securities issued by non-financial corporations, of the growth rate of bank loans granted to non-financial corporations and the rate of return of the main stock index to a unit impulse on aids. The confidence intervals are determined by the blue shades.
0 1 2 3 -0.5 -0.25 0 0.25 0.5 aids:gdp 68% 90% 95% 0 1 2 3 -5 -4 -3 -2 -1 0 1 2 3 4 5 aids:secur 68% 90% 95% 0 1 2 3 -2 -1 0 1 2 aids:loans 68% 90% 95% 0 1 2 3 -5 -4 -3 -2 -1 0 1 2 3 4 5 aids:stock 68% 90% 95%
Figure 5: Response of capital formation to a unit impulse on financial
variables
Impulse-response function based on the panel vector autoregression (4). The charts represent the response of the first difference of the growth rate of gross domestic product, to a unit impulse on the first differences of the growth rate of securities and of the growth rate of the main stock index, respectively. The confidence intervals are determined by the blue shades.
0 1 2 3 -0.15 -0.1 -0.05 0 0.05 0.1 0.15 secur:gdp 68% 90% 95% 0 1 2 3 -0.1 -0.05 0 0.05 0.1 stock:gdp 68% 90% 95%
T
able
1:
Summary
statistics
b
y
coun
try
Time-a v e ra ge of the v ariables for eac h of the 28 coun tries in the Europ ean Union b et w een 1999 and 2016 and dumm y v ariables emplo y ed in our analysis. The v ariable dum a distinguishes bank-based coun tries (dum a = 1 ) from mark et-based coun tries (dum a = 0 ). The v ariable dum b distinguishes credit-b o om coun tries (dum b = 1 ) from n o n credit-b o om coun tries (dum b = 0 ). country aids cum_aids gdp gfcf intbk3m fiscal ulc dereg spread secur loans stock dum a dum b Austria 0.006 0.038 0.016 0.010 0.021 1.518 0.015 0.695 0.003 0.104 0.009 0.090 0 0 Belgium 0.018 0.093 0.017 0.020 0.021 -0.302 0.016 0.686 0.021 0.073 0.022 0.034 1 0 Bulgaria 0 0 0.032 0.061 0.033 0.745 0.051 0.597 0.053 0.016 0.124 0.226 1 1 Croatia 0 0 0.017 0.021 0.021 -1.425 0.017 0.560 0.061 0.043 -0.034 0.102 [-] 1 Cyprus 0.007 0.043 0.020 0.016 0.021 -2.173 0.018 0.714 0.020 0.159 0.067 -0.019 1 0 Czech Rep. 0 0 0.027 0.024 0.032 5.092 0.021 0.687 0.018 -0.008 0.077 0.099 0 1 Denmark 0.015 0.120 0.012 0.014 0.024 -0.433 0.019 0.744 0.002 0.085 0.049 0.120 0 1 Estonia 0 0 0.037 0.036 0.021 -6.302 0.050 0.749 0.049 0.070 0.005 0.192 1 0 Finland 0 0 0.017 0.012 0.021 -0.455 0.019 0.716 0.026 0.093 0.005 0.091 0 1 France 0.004 0.023 0.014 0.017 0.021 0.038 0.016 0.617 0.024 0.069 0.064 0.041 0 0 Germany 0.003 0.024 0.014 0.010 0.021 0.026 0.010 0.698 0.022 0.052 0.045 0.074 1 1 Greece 0.051 0.230 0.003 -0.030 0.021 -0.535 0.018 0.589 0.073 0.069 0.037 -0.016 0 1 Hungary 0.001 0.010 0.022 0.016 0.082 -2.536 0.041 0.650 0.030 0.063 0.015 0.150 0 0 Ireland 0.042 0.375 0.053 0.068 0.021 -0.859 0.000 0.791 0.015 0.223 0.006 0.060 0 1 Italy 0.003 0.015 0.004 -0.003 0.021 0.081 0.020 0.618 0.032 0.047 0.024 0.002 0 1 Latvia 0.013 0.078 0.038 0.037 0.021 -7.935 0.053 0.659 0.052 0.070 -0.053 0.139 1 1 Lithuania 0.000 0.001 0.039 0.038 0.021 4.142 0.023 0.690 0.053 0.016 0.095 0.192 1 0 Luxembourg 0.001 0.005 0.034 0.032 0.021 -0.940 0.027 0.759 -0.004 0.090 0.106 0.069 1 0 Malta 0 0 0.031 0.036 0.021 2.019 0.023 0.649 0.018 0.098 0.021 0.126 1 0 Netherlands 0.006 0.039 0.016 0.012 0.021 5.827 0.016 0.738 0.002 0.047 0.033 0.032 0 0 Poland 0 0 0.037 0.032 0.075 -0.095 0.012 0.618 0.069 0.120 0.076 0.120 0 1 Portugal 0.009 0.050 0.007 -0.019 0.021 -1.032 0.014 0.643 0.029 0.033 -0.002 -0.010 0 0 Romania 0 0 0.036 0.055 0.240 -1.383 0.132 0.582 0.033 0.034 0.123 0.290 1 1 Slovakia 0 0 0.037 0.012 0.021 -0.963 0.026 0.653 0.067 0.307 0.046 0.103 1 1 Slovenia 0.017 0.077 0.023 0.003 0.021 -0.467 0.032 0.615 0.020 0.086 0.022 -0.003 1 1 Spain 0.008 0.049 0.019 0.013 0.021 0.011 0.017 0.684 0.049 0.070 0.030 0.032 0 0 Sweden 0.003 0.019 0.025 0.032 0.022 -0.179 0.020 0.698 0.012 0.162 0.041 0.090 0 0 United Kingdom 0.003 0.022 0.019 0.014 0.034 0.168 0.023 0.769 0.006 0.031 0.023 0.030 1 0 Notes: If the variable aids and cum_aids app ear as 0 without digits, no State aids have be en use d by the country’s financial institutions. Se curities issue d by total ec onomy in 2007 ar e not available for Cr o atia.Table 2: The effect of State aids on growth, investment and financial
variables
Panel regressions results for macroeconomic variables (a) and first differences of financial variables (b), respectively. The estimator is the fixed-effect least squares estimator corrected so as to account for cross-country heteroscedasticity. We also report the overall adjusted coefficient of determination R2and the p-value F
pof the F-statistic for overall parameter significance. The
number of countries in the regression is Ng while N is the total size of the dataset.
(a) y gdp gfcf intbk3m−1 -0.081 0.852 [0.180] [0.783] fiscal−1 -0.000* -0.001** [0.000] [0.000] ulc−1 0.035 -0.636 [0.086] [0.458] dereg−1 -0.010 0.086 [0.107] [0.293] spread−1 -0.408*** -1.112*** [0.139] [0.342] secur−1 0.033** 0.100* [0.012] [0.054] loans−1 -0.016 0.038 [0.028] [0.108] stock−1 -0.004 -0.009 [0.009] [0.031] cum_aids−1 0.054** 0.125** [0.025] [0.046] const 0.051 -0.013 [0.073] [0.201] Diagnostics R2 0.457 0.444 Fp 0.000 0.000 Ng 28 28 N 243 243 (b)
y ∆secur ∆loans ∆stock
∆intbk3m−1 -2.277 0.953 3.230 [3.011] [0.897] [3.397] ∆fiscal−1 0.001 -0.000 -0.000 [0.001] [0.000] [0.000] ∆ulc−1 -0.539 -0.263 -0.384 [0.633] [0.280] [0.687] ∆dereg−1 0.010 -0.004 -0.003 [0.025] [0.006] [0.019] ∆spread−1 3.101** -0.308 1369 [1.143] [0.255] [0.888] ∆secur−1 [-] -0.022 -0.035 [-] [0.021] [0.092] ∆loans−1 -0.319 [-] -0.209 [0.257] [-] [0.237] ∆stock−1 -0.181 0.071* [-] [0.190] [0.041] [-] aids−1 1.028** -0.110 0.585** [0.501] [0.097] [0.279] const -0.016 0.046** 0.070* [0.058] [0.019] [0.039] Diagnostics R2 0.449 0.370 0.678 Fp 0.000 0.000 0.000 Ng 28 28 27 N 225 229 215 Notes: *** p<0.01; ** 0.01≤ p<0.05; * 0.05≤ p<0.10
Table 3: The effect of state aids on growth, investment and financial
variables by type of State aids
Panel regressions results for macroeconomic variables when cum_aids is substituted by cumulated guarantees used (cum_guar) (a) and cumulated recapitalizations used (cum_recap) (b), respectively. The estimators and diagnostics are as in Table 2.
(a) y gdp gfcf intbk3m−1 -0.086 0.841 [0.180] [0.780] fiscal−1 -0.000* -0.001** [0.000] [0.000] ulc−1 0.037 -0.630 [0.085] [0.454] dereg−1 -0.007 0.092 [0.099] [0.288] spread−1 -0.399*** -1.093*** [0.136] [0.336] secur−1 0.033** 0.100* [0.012] [0.054] loans−1 -0.018 0.035 [0.028] [0.107] stock−1 -0.004 -0.009 [0.009] [0.031] cum_guar−1 0.067** 0.157*** [0.030] [0.053] const 0.049 -0.017 [0.067] [0.198] Diagnostics R2 0.460 0.447 Fp 0.000 0.000 Ng 28 28 N 243 243 (b) y gdp gfcf intbk3m−1 -0.067 0.834 [0.183] [0.789] fiscal−1 -0.000* -0.001** [0.000] [0.000] ulc−1 0.031 -0.641 [0.081] [0.471] dereg−1 -0.051 0.061 [0.128] [0.314] spread−1 -0.422*** -1.199*** [0.138] [0.349] secur−1 0.032** 0.097* [0.012] [0.053] loans−1 -0.008 0.065 [0.029] [0.110] stock−1 -0.004 -0.008 [0.009] [0.032] cum_recap−1 0.352*** 1.074** [0.111] [0.451] const 0.079 0.008 [0.088] [0.213] Diagnostics R2 0.427 0.434 Fp 0.000 0.000 Ng 28 28 N 243 243 Notes: *** p<0.01; ** 0.01≤ p<0.05; * 0.05≤ p<0.10
Table 4: Bank-based countries
Panel regressions results for macroeconomic variables (a) and first differences of financial variables (b) when a dummy controlling for the degree of bank dependence of countries is included in the model. The dummy variable duma is equal to 1 if the ratio between financial
institutions assets and market size (the bank-market ratio) in 2007 is above the cross-country median in that year, and zero otherwise. The estimators and diagnostics are as in Table 2.
(a) y gdp gfcf intbk3m−1 -0.068 0.894 [0.180] [0.761] fiscal−1 -0.000** -0.001** [0.000] [0.001] ulc−1 0.031 -0.713 [0.086] [0.438] dereg−1 -0.037 -0.037 [0.095] [0.268] spread−1 -0.374*** -0.943*** [0.094] [0.253] secur−1 0.032** 0.094* [0.013] [0.052] loans−1 -0.020 0.037 [0.028] [0.103] stock−1 -0.004 0.000 [0.009] [0.034] duma∗ cum_aids−1 0.002 0.071 [0.032] [0.108] (1 − duma) ∗ cum_aids−1 0.054** 0.113** [0.027] [0.042] const 0.068 0.062 [0.067] [0.189] Diagnostics R2 0.474 0.433 Fp 0.000 0.000 Ng 27 27 N 243 243 (b)
y ∆secur ∆loans ∆stock
∆intbk3m−1 -2.055 0.957 3.409 [2.939] [0.901] [3.426] ∆fiscal−1 0.001 -0.000 -0.000 [0.001] [0.000] [0.000] ∆ulc−1 -0.525 -0.262 -0.314 [0.654] [0.280] [0.703] ∆dereg−1 0.965 -0.426 -0.578 [2.426] [0.577] [1.703] ∆spread−1 3.108** -0.307 1.412 [1.172] [0.254] [0.870] ∆secur−1 [-] -0.022 -0.044 [-] [0.021] [0.094] ∆loans−1 -0.308 [-] -0.182 [0.252] [-] [0.230] ∆stock−1 -0.198 0.070 [-] [0.166] [0.043] [-] duma∗ aids−1 4.567 -0.011 3.833 [5.118] [0.685] [2.527] (1 − duma) ∗ aids−1 0.877* -0.115 0.409** [0.476] [0.091] [0.192] const -0.019 0.046** 0.065 [0.062] [0.019] [0.040] Diagnostics R2 0.444 0.371 0.676 Fp 0.000 0.000 0.000 Ng 27 27 27 N 223 228 215 Notes: *** p<0.01; ** 0.01≤ p<0.05; * 0.05≤ p<0.10
Table 5: Credit-boom countries
Panel regressions results for macroeconomic variables (a) and first differences of financial variables (b) when a dummy controlling for credit-boom in the pre-crisis period is included in the model. The dummy variable dumb is equal to 1 if the growth rate of bank loans to non-financial
companies of the country between 2004 and 2007 is above the correspondent cross-country median (credit-boom) and zero otherwise (non credit-boom). The estimators and diagnostics are as in Table 2. (a) y gdp gfcf intbk3m−1 -0.066 0.825 [0.178] [0.771] fiscal−1 -0.000** -0.002** [0.000] [0.001] ulc−1 0.034 -0.704 [0.086] [0.435] dereg−1 -0.058 -0.050 [0.092] [0.261] spread−1 -0.364*** -0.923*** [0.090] [0.253] secur−1 0.031** 0.092* [0.013] [0.051] loans−1 -0.019 0.035 [0.027] [0.103] stock−1 -0.004 0.002 [0.009] [0.034] dumb∗ cum_aid−1 0.051** 0.104*** [0.025] [0.035] (1 − dumb) ∗ cum_aid−1 0.018 0.237 [0.038] [0.184] const 0.082 0.074 [0.065] [0.185] Diagnostics R2 0.467 0.421 Fp 0.000 0.000 Ng 28 28 N 245 245 (b)
y ∆secur ∆loans ∆stock
∆intbk3m−1 -2.418 0.954 3.231 [3.094] [0.902] [3.407] ∆fiscal−1 0.001 -0.000 -0.000 [0.001] [0.000] [0.000] ∆ulc−1 -0.516 -0.265 -0.382 [0.660] [0.280] [0.687] ∆dereg−1 1.019 -0.425 -0.348 [2.474] [0.572] [1.887] ∆spread−1 3.152** -0.311 1.370 [1.181] [0.252] [0.897] ∆secur−1 [-] -0.023 -0.035 [-] [0.021] [0.092] ∆loans−1 -0.313 [-] -0.209 [0.248] [-] [0.240] ∆stock−1 -0.192 0.071 [-] [0.174] [0.042] [-] dumb∗ aids−1 0.915** -0.103 0.582* [0.475] [0.099] [0.322] (1 − dumb) ∗ aids−1 4.051 -0.300 0.677 [4.353] [0.519] [1.544] const -0.005 0.046** 0.070* [0.059] [0.019] [0.039] Diagnostics R2 0.447 0.370 0.678 Fp 0.000 0.000 0.000 Ng 28 28 28 N 225 229 215 Notes: *** p<0.01; ** 0.01≤ p<0.05; * 0.05≤ p<0.10
