Financial Absorption of Cohesion Policy Funds: How Do Programmes and Territorial Characteristics Influence the Pace of Spending?

Using data from the execution of 2014–2020 cohesion policy, this article presents a novel indicator to measure how fast European territories were able to spend their allocated budget and then explores the drivers of such financial performance. This analysis aims to fill a gap in scientific literature as most existing studies tend to focus solely on the total absorption at the end of the period without looking at the average financial performance over time. The article also explores the influence on financial absorption of the governance model (nationally or regionally managed programmes) and the thematic structure of the funds, which has never been done before. The determinants of the speed of financial absorption are investigated through a Tobit model. Results show that both programme‐specific and territorial characteristics are relevant factors in explaining the varying levels of fund absorption. This suggests that increased flexibility in spending rules and the adoption of more tailored strategies could be instrumental in improving fund absorption.