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The nexus between financial mechanisms and economic performance: empirical evidence from Greece

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  • Doksaki Eftichia

    (Faculty of Economics, South-West University "Neofit Rilski", Blagoevgrad)

Abstract

The paper aims to investigate the impact of direct and indirect financial mechanisms on the economic performance of Greece over the period 1999-2019. Employing both bivariate analysis tools and the Generalized Method of Moments (GMM) technique, the study reveals diverse interactions among key macroeconomic factors. Direct finance, exemplified by heightened stock market activity, exhibits a positive impact on economic growth. Meanwhile, lagged inflation, indirect finance, and foreign direct investment emerge as significant contributors to inflation. Unemployment dynamics reveal a robust positive influence of past rates on current levels, while economic growth exhibits a negative impact, aligning with traditional labor economics. Notably, the minimal role of indirect finance in the wake of the Greek financial crisis prompts further investigation into the causal relationship between the banking sector and economic growth in Greece. The identified results point to some deviations from international patterns, underscoring the necessity for country-specific economic policy intervention.

Suggested Citation

  • Doksaki Eftichia, 2024. "The nexus between financial mechanisms and economic performance: empirical evidence from Greece," Entrepreneurship, Faculty of Economics, SOUTH-WEST UNIVERSITY "NEOFIT RILSKI", BLAGOEVGRAD, vol. 12(1), pages 27-39.
    • Handle: RePEc:neo:epjour:v:12:y:2024:i:1:p:27-39
    DOI: 10.37708/ep.swu.v12i1.4
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