Credit Intensity of Economic Growth – A Sectoral Analysis: Case of Sri Lanka

Perera, W. S. Navin

doi:10.4038/ss.v47i1.4701

Cited by 3 publications

(4 citation statements)

References 35 publications

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“…This result confirms the 'demand following hypothesis, which emphasizes that economic growth tends to boost credit supply as elucidated by Robinson (1952), Kuznets (1955), andLucas (1988). This finding is consistent with previous studies that has determined that economic growth tends to enhance credit growth (Calza et al 2001;Cottarelli et al 2005;Perera, 2017). Inflation (INF) tends to be a negative determinant of credit growth as it is significant at 1 percent level in these estimates.…”

Section: Ardl Testsupporting

confidence: 91%

“…However, a number of studies that addressed the economic impact of credit growth in general are available. For instance, Perera (2017) has conducted a sectoral analysis to find the impact of credit intensity on economic growth. The study has found evidence in support of the demand following hypothesis of finance-growth nexus.…”

Section: Empirical Evidence and Hypothesis Developmentmentioning

confidence: 99%

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Short and Long Term Determinants of Bank Credit Growth in Sri Lanka

Dharmadasa

2021

S. Asian J. Finance

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Credit exchange relations in the marketplace, according to Karl Marx, take two forms, namely, commercial credit relation and the monetary credit relation. The former explains buying commodities against a promise to pay, and the latter explains lending money with a view of earning interest. This, on the other hand, implies a movement of interest-bearing capital in which it is determined by the demand and supply of interest-bearing capital (Lapavitsas, 1991). The analysis of this paper is built around the second relation of credit, which is banks' monetary credit, as it plays a significant role in the process of economic growth and development.Generally, banks provide a significant amount of capital to both public and private sectors in the form of loans and therefore, the status of banks credit indicates the collective health of the markets and the economy. Since credit given to individuals and institutions is often converted into capital, and thereby used for productive economic activities, the growth of the credit market may also indicate growth of productive economic activities. Some economies therefore enhance credit growth as a catching-up strategy because easier access to credit paves the way to achieve their developmental targets (Bayoumi and Melander, 2008).

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Section: Ardl Testsupporting

confidence: 91%

Section: Empirical Evidence and Hypothesis Developmentmentioning

confidence: 99%

Short and Long Term Determinants of Bank Credit Growth in Sri Lanka

Dharmadasa

2021

S. Asian J. Finance

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“…However, in this paper, using the VAR model, the main goal is to show exclusively dynamic responses of variables to unexpected shocks in other variables. Since the task of analysis in this paper is not to estimate the parameters per se but to observe the same dynamic responses, the variables of the subject VAR model are also non-stationary (e.g., Perera (2017), using non-stationary variables, as suggested by Sims (1980) and Sims, Stock and Watson (1990)). Therefore in further analysis raw data of variables are used.…”

Section: Var Modelmentioning

confidence: 99%

Interaction of GDP Growth Rate and FDI in Service Sector - Case of Croatia

Pečarić

Kusanović

Šitum³

2021

Trans. Marit. Sci.

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Croatia is characterised by a foreign direct investment (FDI) inflow, mainly in the service sector, which is partly understandable owing to the country's orientation towards tourism. On the other hand, theoretical and empirical research indicates a weak impact of FDI in the service sector on the economic growth of the recipient country. Following the theoretical framework and critical analysis of previous research, the paper, on the example of Croatia in the period q1/2000 - q3/2020, uses the VAR model to analyse the mutual influence of GDP growth rate and FDI in the service sector. The results show that the impact of the GDP growth rate on the FDI inflow into the service sector is more significant and longer lasting than vice versa. The paper emphasises the importance of the adopted growth model for the type of FDI inflows into the recipient country, which in this case is characterised by the appreciation of the real exchange rate as an indicator of the country's competitiveness, whose impact on FDI inflow into the service sector is positive and long lasting.

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“…The progress of the economic sector can produce more abundant output so that the positive impact is the expansion of job opportunities and the high demand for goods/services. Some researchers have a positive influence such as (Abusharbeh, 2017;Alzyadat, 2021;Ananzeh, 2016;Korkmaz, 2015;Oni et al, 2014;Timsina & Pradhan, 2016) although the title of causality has not been determined (Perera, 2017).…”

Section: Introductionmentioning

confidence: 99%

Which Sector-Based Bank Lending Facilities can Contribute to Long-Term Economic Growth? : Indonesian Study

Nurinda

Mukhlis

2022

JEFMS

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Knowing which sector credit facilities can contribute to increasing economic growth in the long term in Indonesia, is the main objective of the research. This research uses secondary data as quarterly data from 2010Q1 to 2019Q4. Using the VECM approach to identify long-term effects, equipped with structural analysis to determine the response to shocks as well as the resulting contribution. Overall sectoral bank credit facilities have a significant long-term impact on GDP, it was found, though of a different nature. The positive nature of credit facilities for the agricultural sector, wholesale and retail trade sector, and the transport, warehousing and communications sectors, while credit for manufacturing, construction, and financial intermediaries had the opposite impact. A credit shock for construction and financial intermediary sector loans responded positively in the long and short term, while credit for the manufacturing sector received the largest negative response. The largest contribution to economic growth came from manufacturing sector credit, financial intermediary sector credit, agricultural sector credit, and lastly, construction sector credit. Researchers suggest increasing credit allocations to agribusiness, discount and retail exchange, and the transport and communications sectors to meet long-term goals, while in the short term, maximizing the allocation of credit between the manufacturing sector, the financial intermediaries sector, and the transport and communications sector.

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Credit Intensity of Economic Growth – A Sectoral Analysis: Case of Sri Lanka

Abstract: This paper examines the dynamic relationship between credit and economic growth in Sri Lanka using aggregated and disaggregated data for the period [2003][2004][2005][2006][2007][2008][2009][2010][2011][2012][2013][2014][2015]

Cited by 3 publications

References 35 publications

Short and Long Term Determinants of Bank Credit Growth in Sri Lanka

Short and Long Term Determinants of Bank Credit Growth in Sri Lanka

Interaction of GDP Growth Rate and FDI in Service Sector - Case of Croatia

Which Sector-Based Bank Lending Facilities can Contribute to Long-Term Economic Growth? : Indonesian Study

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