A comparative analysis of financial sectors in Europe

Abstract

Financial sectors in Europe have been the backbone of several economies throughout the years, while collectively, they have put Europe at the forefront for global competition with other financial hubs. It was therefore seen as ideal, especially at times of great macroeconomic volatility, that a comparative analysis is done as to assess on which financial sectors Europe is mostly dependent on, and which domestic economies mostly rely on the financial sectors. The study has gone through all European countries from a quantitative approach, and has assessed different elements of the markets, such as the Gross Domestic Products (GDP), Gross Value Added (GVA), the Gross Operating Surplus (GOS), and so on. Furthermore, the figures obtained were deflated as to provide a more realistic overview of the European financial sectors, given inflationary pressures in recent years. The GOS, GVA, and Compensation for employees were then analysed through graphs for every EU country, to be able to compare each financial sector with the other. It was also noted that there is a strong element of dependency between the Gross Domestic Product of a country and the Gross Value Added created by the financial sector of the country, despite this not being applicable for all countries. This is because, for most countries, it was noted that as the GVA of the financial sector grows, the GDP of the country grows as well. The other way round was also assessed, where it was noted that, for most countries, as the GDP of a country increases, the GVA of financial institutions grows as well. For the countries that such a relationship was not relevant, plausible explanations were researched and laid out, as to try to derive an answer on why this is not applicable. This was also true for the employment rate within the financial sector, where it was noted that, for most countries, higher GDP will result into greater employment rates within the financial sector as to cater for this growth. From a qualitative approach, 5 countries were chosen which were deemed as some of the most prominent financial sectors in Europe and some of the largest within their domestic economy, or because a particular trend was noticed for their financial sector, whereby a case study for each has been done. These countries, which are Malta, Luxembourg, Cyprus, Ireland, and Portugal, were analysed as to obtain an overview of the country’s financial market, the present state of the financial market within the country, and the future of that financial market. It was noted, in general, that several governments all around Europe are putting in efforts as to better their position and become more prominent within such sector. This was mainly noted through the qualitative approach, which saw detailed plans being put in place by the governments of the chosen countries, in order for the financial markets of these countries to continue to evolve. All of this show that financial markets in Europe remain catalyst for the domestic and European economies, requiring proper supervision and input by Governments to protect and stabilise this significant sector of the economy.