Macro-Regions, Country Effect and Financial Ratios: A Comparative Study in the Euro Area

During the sovereign debt crisis that has hit Europe, many economists and political actors have questioned if a common strong currency can accommodate countries and regions that clearly exhibit very different macroeconomic performances. The aim of this paper is to contribute to a deeper discussion of this problem, by analyzing the disparities within the Eurozone beyond the usual macroeconomic point of view. This study analyses differences among financial ratios belonging to a representative set of firms from six Euro area countries. The analysis covers the first decade of the 21st century and investigates patterns in these ratios and the existence of possible clusters and breaks in the data series after 2008, the beginning of the present financial crisis. The empirical and statistical analyses confirm these changes as well as the existence of territorial clusters that show the relevance of future macro- -regional strategies across Europe, following the creation of the first European Union macro-regional strategy in 2009.