Equity markets

In all official documentation, the Capital Markets Union (CMU) is considered a key pillar in the Commission’s Investment Plan for Europe and an important part of the work on the completion of the European Economic and Monetary Union. Through the CMU, the European Commission aims to facilitate firms’ financial funding by fostering investments and increasing financial integration in European capital markets. Whilst the Banking Union refers to the 19 Euro area countries, at inception the CMU was envisaged for EU28 members. This paper offers insight on two key issues referred to the potential contribution of public stock markets to the financing of the EU economy as set out in the CMU action plan: (i) whether European stock markets over a long period of time have been a source of funding for listed companies and support SME growth; (ii) using a sample of listed firms, whether financing choices and listing decisions reflect company profitability, size, financing structure and taxation.