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Financial development and economic growth in Central and Eastern Europe

Author

Listed:
  • Monica DUDIAN

    (The Bucharest University of Economic Studies)

  • Raluca Andreea POPA

    (The Bucharest University of Economic Studies)

Abstract

The objective of this paper is the empirical analysis of the relationship between financial development and economic growth in Central and Eastern Europe. Financial development is measured by broad money growth (annual%), domestic credit to private sector (% GDP), domestic credit to private sector (% GDP) annual growth, interest rate spread (lending rate minus deposit rate,%) and nonperforming loans (% total loans) and annual growth in GDP growth rates. Methodologically, we used a panel model for eight countries in Central and Eastern Europe for the period 1996 - 2011 (the date panel approach). The main conclusions of the paper are: (1) increase nonperforming loans and interest rate spreads negatively affect economic growth, (2) increase in domestic credit to private sector negatively affect GDP growth, but increase its growth rate positively affects GDP (3) broad money growth is less relevant for economic growth.

Suggested Citation

  • Monica DUDIAN & Raluca Andreea POPA, 2013. "Financial development and economic growth in Central and Eastern Europe," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(8(585)), pages 59-68, August.
    • Handle: RePEc:agr:journl:v:xx:y:2013:i:8(585):p:59-68
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    Citations

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    Cited by:

    1. Iwasaki, Ichiro & Kumo, Kazuhiro, 2016. "Decline and Growth in Transition Economies: A Meta-Analysis," CEI Working Paper Series 2016-9, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    2. Michiel Bijlsma & Clemens Kool & Marielle Non, 2018. "The effect of financial development on economic growth: a meta-analysis," Applied Economics, Taylor & Francis Journals, vol. 50(57), pages 6128-6148, December.
    3. Ab-Rahim, Rossazana & Selvarajan, Sonia Kumari & Md Noor, Nor Ghani & Affizzah Awang Marikan, Dayang, 2018. "Convergence Clubs of Economic Liberalization in ASEAN, China, and India," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 52(3), pages 129-141.
    4. Esra Soyu Yıldırım & Cuma Demirtaş & Munise Ilıkkan Özgür, 2022. "Causality Relationship Between Economic, Financial, Political Risk and Growth: The Case of Turkey," Journal of Economic Policy Researches, Istanbul University, Faculty of Economics, vol. 9(1), pages 165-186, January.
    5. Stojkoski, Viktor & Popova, Kristina, 2016. "Financial Development and Growth: Panel Cointegration Evidence from South-Eastern and Central Europe," MPRA Paper 69029, University Library of Munich, Germany.
    6. Michiel Bijlsma & Clemens Kool & Marielle Non, 2018. "The effect of financial development on economic growth: a meta-analysis," Applied Economics, Taylor & Francis Journals, vol. 50(57), pages 6128-6148, December.
    7. Shigeki Ono & Ichiro Iwasaki, 2022. "The Finance-Growth Nexus in Europe: A Comparative Meta-Analysis of Emerging Markets and Advanced Economies," Eastern European Economics, Taylor & Francis Journals, vol. 60(1), pages 1-49, January.
    8. Gergana Mihaylova-Borisova, 2023. "Determinants of Credits on Private Sector in CEE Countries," Economic Research Guardian, Weissberg Publishing, vol. 13(1), pages 2-15, June.
    9. ARIC Kıvanç Halil & ERKEKOĞLU Hatice, 2014. "The Effect Of Financial Development On Growth In Countries Joining The Eu After 2004: A Panel Data Analysis," Revista Economica, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 66(3), pages 60-71.
    10. Mohammed T. Abusharbeh, 2022. "Determinants of credit risk in Palestine: Panel data estimation," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(3), pages 3434-3443, July.

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