EU INTEGRATION AND BANK LENDING: EVIDENCE FROM MEMBER STATES AND SELECTED WESTERN BALKAN COUNTRIES

Abstract

This paper examines the associations between EU integration events and bank lending growth across EU member states and selected Western Balkan candidate countries, using a harmonised bank-level panel from 31 countries over 2000–2023 (5,269 baseline observations). Five milestones — Candidate status, Negotiations, Membership, Monetary Union, and Banking Union — are analysed individually, as Widening and Deepening groups, and in aggregate, across the event-year, three-year and five-year post-event windows. Aggregate and Deepening events are significantly and positively associated with gross-loan growth over the three- and five-year windows, while Membership and Monetary Union show the most robust positive associations. An exploratory interaction analysis, which does not identify mechanisms, finds conditional associations more pronounced at the country level than the bank level. New member states show significantly stronger positive lending associations than Western Balkan candidates, whereas new and old members are largely indistinguishable, differing only for Deepening events at the event-year window.