This systematic literature review (SLR) aims to explore the perception of the establishment of the European Capital Markets Union (CMU) in literature. After the Global Financial Crisis (GFC) and the Euro debt crisis lead to a recession, the task of the CMU is to stimulate the European economy, strengthen European financial integration while presenting the EU as a competitive counterpart to other global financial markets. Being part of the financial markets, Capital Markets (CMs) play an important role for financial market-oriented economies. Therefore, this paper will discuss what benefits the CMU can offer in particular for small and medium sized companies (SMEs) in terms of diversifying their funding sources in other words an increase of market-based financing.
Table of Contents
1 Introduction
1.1 Research problem
1.2 Course of investigation
2 European Capital Markets Union
2.1 Definition
2.2 Structural features and goals
2.3 Market status
3 Method
3.1 Systematic literature review
3.2 Research strategy
3.2.1 Sources of data
3.2.2 Inclusion and exclusion criteria
3.2.3 Search terms and filters
3.3 Literature search results
3.4 Review of results
3.4.1 Abstract review
3.4.2 Full text review
4 Discussion of results
5 Summary and critical acclaim
5.1 Summary
5.2 Critical acclaim
Research Objectives and Core Themes
This systematic literature review explores how the establishment of the European Capital Markets Union (CMU) is perceived in existing academic literature, specifically focusing on its impact on SME financing and the diversification of corporate funding sources in the European Union.
- Impact of the CMU on SME financing accessibility.
- Evaluation of bank-based versus market-based financing systems.
- Analysis of structural barriers within European capital markets.
- Examination of the efficacy of the CMU initiative in achieving its goals.
- Synthesis of academic perspectives on the relationship between firms and capital markets.
Excerpt from the Book
2.1 Definition
In 2015 the project of CMU was introduced by the European Commission (EC) (Dinov, 2020, p. 3). The CMU initiative aims at developing and integrating the EU financial markets to address the issue of financial market fragmentation across different MS (Kraemer-Eis & Lang, 2017, p. 96). The idea of a CMU includes rebalancing the intermediation process to improve access, diversification and efficiency of financial markets (Dombret, 2015, p. p 81). The “union” notion is not meant to be symbolic but instead, it stands for the cross-border, market integration dimension and builds on efforts at making Europe’s financial architecture more resilient (Kotz, & Schäfer, 2017, p. 90). It must be differentiated between the CMU and a Banking Union, because unlike the latter, CMU is not subject to crisis management considerations or limited to financial markets but rather part of the broader long-term EU agenda of structural reform. While the Banking Union centres on the Eurozone, CMU extends to the entire EU. Therefore, CMU continues the history of promoting the Single European Market idea that started with the Treaty of Rome’s declaration in support of the free movement of capital in1957 (ibid, Dombret, 2015, p. p 16)
Summary of Chapters
1 Introduction: Introduces the research problem of SME financing gaps and outlines the scope of the systematic literature review.
2 European Capital Markets Union: Defines the CMU, explores its structural goals, and assesses the current status of European markets.
3 Method: Details the nine-step systematic literature review process, including database selection and search criteria.
4 Discussion of results: Analyzes various academic findings regarding the effectiveness, challenges, and mixed reception of the CMU project.
5 Summary and critical acclaim: Synthesizes the main findings and acknowledges the methodological limitations of this research paper.
Keywords
financial aspects of economic integration, financial regulation, investment and savings, relationship-banking, SME finance, Capital Markets Union, Single Market, corporate finance, European Union, bank-based finance, market-based finance, capital allocation, diversification.
Frequently Asked Questions
What is the core focus of this research paper?
The paper performs a systematic literature review to analyze the perception and potential impacts of the European Capital Markets Union (CMU) on SME financing within the EU.
What are the primary themes discussed in the paper?
The text focuses on capital market integration, SME access to external funding, the diversification of financial sources, and the interplay between bank-based and market-based financial systems.
What is the main objective or research question?
The research aims to determine how the establishment of the CMU is reflected in scientific literature, particularly in the context of improving financing options for small and medium-sized enterprises.
Which scientific method is applied in this study?
The author uses a nine-step Systematic Literature Review (SLR) methodology to gather, filter, and synthesize relevant academic sources.
What major topics are addressed in the main body?
The main body covers the definition and goals of the CMU, the market status of EU finance post-crisis, and a critical discussion of academic views on whether the CMU can effectively replace or complement traditional bank lending.
Which keywords best characterize this work?
Key terms include Capital Markets Union, SME finance, financial regulation, economic integration, and relationship-banking.
Why are SMEs often reluctant to turn to capital markets for financing?
The literature suggests that SMEs fear losing corporate control to equity investors, find the administrative burden of listing too high, and lack sufficient financial education.
How does the CMU differ from a Banking Union?
Unlike the Banking Union, which focuses on crisis management and the Eurozone, the CMU is a long-term structural reform agenda aimed at the entire EU to foster market integration and diversification.
What is the general conclusion regarding the CMU's success in the literature?
The literature is split; while many acknowledge the CMU's potential to improve funding diversity, others argue that bank lending will remain the dominant model due to the unique monitoring and screening advantages banks provide for SMEs.
- Quote paper
- Luca Dominikat (Author), 2020, The European Capital Markets Union. A Systematic Literature Review, Munich, GRIN Verlag, https://www.grin.com/document/1356327
