The effect of the European structural and investment funds on regional financial interest

Abstract: This paper examines what effect the European structural and investment funds have on financial interest in EU regions for the period 2006 to 2014. The aim of the paper is to fill the gap in research into the EU funds’ success at attracting financial interest in the form of private investment to EU regions. The paper uses a fixed effects model with region level panel data to estimate the effect of all funds combined and each fund separately. Contrary to most other papers, which investigate the effects on FDI related investments, this paper uses merger and acquisition research to identify determinants of private investor decisions. The advantage of this paper’s approach is that the model can control for the underlying determinants of investor decisions. But the disadvantage is that it requires detailed and sometimes unavailable data. The paper finds mixed effects from the EU funds on financial interest in the EU regions. The regional fund and rural fund show positive results for both rich and poor, the social fund shows a possibly negative effect for both rich and poor, and the cohesion fund shows inconclusive results.