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Evaluating the Nexus Between Financial Deepening and Economic Growth: Evidence from Ukraine

Author

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  • Kondrat Iryna
  • Kots Olha

    (Lviv Polytechnic National University, Lviv, Ukraine)

Abstract

In this paper systemic problems of Ukrainian banking sector are reviewed and the solutions are offered. The main objective of the study is to examine the relationship between a financial deepening and economic growth in Ukraine by estimating several multiple regression models over the 1993 to 2015 period. A real GDP growth per capita was used as an indicator for the economic growth. The domestic credit to private sector (% of GDP) was used as an index of financial depth. The study concludes that financial deepening causes a slight impact on the economic growth of Ukraine. A low level of impact is an indicator of a limitedness of lending to the real economy. This means that banking sector has not become the real driving force of the economic growth in Ukraine yet. The study suggests a statement that policy makers should design the policies which will encourage lending especially high tech production, small and mid-size business, micro financing to the real economy to promote economic growth and increase employment.

Suggested Citation

  • Kondrat Iryna & Kots Olha, 2018. "Evaluating the Nexus Between Financial Deepening and Economic Growth: Evidence from Ukraine," Financial Sciences. Nauki o Finansach, Sciendo, vol. 23(1), pages 49-64, March.
    • Handle: RePEc:vrs:finsci:v:23:y:2018:i:1:p:49-64:n:4
    DOI: 10.15611/fins.2018.1.04
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    References listed on IDEAS

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