Does banking sector development promote economic growth? An empirical analysis for selected countries in Central and South Eastern Europe

Economic growth is one of the ultimate goals of any economic system. This article examines the question whether in 16 transition economies from Central and South Eastern Europe the banking sector influences economic growth. The empirical investigation was carried out using a generalised method of mo...

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Bibliographic Details
Published in:Economic research - Ekonomska istraživanja 2014-01, Vol.27 (1), p.55-66
Main Authors: Petkovski, Mihail, Kjosevski, Jordan
Format: Article
Language:English
Subjects:
Banking
Banking industry
banking sector development
Causality
Central and South Eastern Europe
Credit
Econometrics
Economic growth
Economic indicators
Economic theory
Financial services
GDP
Gross Domestic Product
Growth rate
Industrial development
Interest rates
Literature reviews
Money
Private sector
Studies
Time series
Transition economies
Variables
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Summary:Economic growth is one of the ultimate goals of any economic system. This article examines the question whether in 16 transition economies from Central and South Eastern Europe the banking sector influences economic growth. The empirical investigation was carried out using a generalised method of moments (GMM) dynamic panel method. We measure the development in the banking sector using the bank credit to the private sector, interest rates, and ratio of quasi money (RQM). The research results show that credit to the private sector and interest margin (IM) are negatively related to the economic growth, while RQM is positively related to economic growth.
ISSN:1331-677X
1848-9664
DOI:10.1080/1331677X.2014.947107