Financial Development and Economic Growth: Evidence from Ten New EU Members

By Guiglielmo Maria Caporale, Christophe Rault, Robert Sova, A. Sova. Social Science Research Network, 2009

138 citations recorded by the source corpus.

This paper reviews the main features of the banking and financial sector in ten new EU members, and then examines the relationship between financial development and economic growth in these countries by estimating a dynamic panel model over the period 1994-2007. The evidence suggests that the stock and credit markets are still underdeveloped in these economies, and that their contribution to economic growth is limited owing to a lack of financial depth. By contrast, a more efficient banking sector is found to have accelerated growth. Furthermore, Granger causality test indicate that causality runs from financial development to economic growth, but not in the opposite direction.

Subfields: Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/8458a6937f1bf6b4edb9643400a0c248c9f81942

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Citations in the corpus

Does banking sector development promote economic growth? An empirical analysis for selected countries in Central and South Eastern Europe (2014, methodology): “To deal with these biases, researchers have utilised dynamic panel regressions with lagged values of the explanatory endogenous variables as instruments (Beck, Levine, & Loayza, 2000; Rioja and Valev, 2004; Caporale et al., 2009).”
How do financial globalization, institutions and economic growth impact financial sector development in European countries? (2020, background): “A lower value of net interest margin and a narrow spread between loan rates and deposit rates indicate greater competition and efficiency (Bikkar 1999; Huang, 2005; Caporale et al. 2009).”