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

Petkovski, Mihail; Kjosevski, Jordan

doi:10.1080/1331677x.2014.947107

Cited by 105 publications

(99 citation statements)

References 42 publications

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“…An overall weak relationship between bank development and growth in nine EU accession countries in 1996-2000 was found by [27] and no impact of stock market development on growth. Similarly, the weakness of the link for 16 CESEE countries during the 1991-2011 period was confirmed by [28], and was explained mainly by the high stock of NPL and banking crisis experiences. In the same vein, evidence by [29], focusing on 10 new European Union members in 1994-2007, suggested that the stock and credit markets in these economies are still underdeveloped and that their contribution to economic growth is limited, owing to low financial depth.…”

Section: Literature Reviewmentioning

confidence: 84%

Financial Development and Economic Growth: The Role of Foreign-Owned Banks in CESEE Countries

et al. 2017

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This study focuses on the role of financial development in the economic growth of Central, Eastern and South-Eastern European (CESEE) countries in the post-communist era (1995)(1996)(1997)(1998)(1999)(2000)(2001)(2002)(2003)(2004)(2005)(2006)(2007)(2008)(2009)(2010)(2011)(2012)(2013)(2014), which coincides with the opening up of financial markets to foreign investors and the global financial crisis. We investigate whether economic growth in CESEE countries has benefited from the presence of foreign-owned banks. To this end, we introduce some refined measures of financial development and control for banks' financial strength. Our results challenge the idea that bank credit fosters economic growth and that foreign-owned banks are indisputably a positive addition to local markets able to foster economic growth.

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Section: Literature Reviewmentioning

confidence: 84%

Financial Development and Economic Growth: The Role of Foreign-Owned Banks in CESEE Countries

et al. 2017

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“…For example, by investigating 21 African countries, Ozturk and Acaravci (2013) reveals that financial development has limited effect on economic growth for most of the countries. Addition to that, Petkovski and Kjosevski (2014) examines Central and South Eastern European countries by utilizing GMM dynamic panel model for ratio of bank credits in private sector, interest rates and Ratio of Quasi Money (RQM). They find evidence of Ratio of Quasi Money (RQM), a proxy of financial, openness impact on economic growth.…”

Section: Literature Reviewmentioning

confidence: 99%

Impact of Financial and Trade Openness on Financial Development in Emerging Market Economies: The Case of Turkey

Çakan¹

2017

American Journal of Economics and Business Administration

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Abstract:The study aims to examine whether the intensity of financial openness, trade openness and foreign direct investment promoted financial development in Turkey for the period 1974-2014. Three financial development indicators are used constructing the data from the World Development Indicators. Autoregressive Distributed Lag Model (ARDL) and the bounds tests are employed to show the long run relationship among variables. The empirical results suggest that financial openness and foreign direct investment have a predictive power in fostering financial development. More, trade openness does not have predictive power on financial development. It can be concluded that financial openness and foreign direct investment can be used to foster financial development as well as economic growth in the case of Turkey. These results has very important inferences on the Turkey's Custom Union agreement with the European Union.

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“…Additionally, Fink et al [2008] found in 9 EU accession countries over 1996-2000 an overall weak relationship and no impact of stock market development on growth. Similarly, Petkovski and Kjosevski [2014], for panel data in 16 CESEE countries, over the period of 1991-2011, confirmed the weaknesses of the link, which is mainly due to the high level of NPLs and banking crisis experiences (mostly in mid 90s). Using longer panel data for 27 transition economies over the period of 1989-2004Akimov et al [2009 found contrasting evidence -there was a strong and positive link between financial development and economic growth.…”

Section: Review Of Literaturementioning

confidence: 65%

Development of Financial Systems in 1995–2014: A Factor Analysis

Iwanicz-Drozdowska

Smaga

2017

Contemporary Trends and Challenges in Finance

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Summary:The aim of the research was to analyse financial system development patterns for both 19 post-communist European economies and 21 non-post-communist (advanced) countries over the 1995-2014 period. The use of a factor analysis allowed for identifying two unobservable factors which account for most of the variance of the 9 observed variables characteristic of the economic and financial development, the banking sector's standing and the structure of the financial sector. Identified factors represent the financial system development and growth of the banking sector, but their roles differ among the analysed groups of countries. The banking sector is a significant driving force of development in both cases. Yet, in advanced economies, a certain role is also played by the stock market, which is not the case for post-communist countries. The results show that there is higher homogeneity in the financial system development patterns in post-communist countries, while the roles of both factors are more heterogeneous among advanced economies. Lastly, the results provide evidence that the global financial crisis did not cause a permanent structural change in these two processes.Keywords: post-communist countries, financial system, factor analysis. We are grateful to dr Marek Karwański for helpful discussions and valuable comments to the earlier version of the paper. All remaining errors are our own. The earlier version of the paper was published as . 48Małgorzata Iwanicz-Drozdowska, Paweł Smaga Streszczenie: Celem badania była analiza rozwoju systemów finansowych 19 europejskich krajów postkomunistycznych i 21 krajów wysokorozwiniętych w okresie 1995-2014. Zastosowanie analizy czynnikowej pozwoliło na zidentyfikowanie dwóch nieobserwowalnych czynników, które odpowiadają za większość wariancji 9 zmiennych charakterystycznych dla rozwoju gospodarki, systemu finansowego oraz kondycji sektora bankowego i struktury systemu finansowego. Pierwszy czynnik obejmuje ogólny rozwój systemu finansowego, a drugi rolę sektora bankowego. Rola poszczególnych czynników jest zróżnicowana w badanych grupach krajów. O ile sektor bankowy jest znaczącą siłą napędową rozwoju w obu grupach, to w krajach wysokorozwiniętych istotną rolę odgrywa także rozwój rynku giełdowego, co z kolei nie jest obserwowalne w krajach postkomunistycznych. Wyniki wskazują na istnienie większej jednorodności w kierunkach rozwoju systemów finansowych wśród krajów postkomunistycznych, natomiast rola wspomnianych czynników jest bardziej zróżnicowana w gospodarkach wysokorozwiniętych. Analiza czynnikowa prowadzi także do wniosku, że globalny kryzys finansowy nie spowodował trwałych zmian strukturalnych w obu procesach.Słowa kluczowe: kraje postkomunistyczne, system finansowy, analiza czynnikowa.

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

Cited by 105 publications

References 42 publications

Financial Development and Economic Growth: The Role of Foreign-Owned Banks in CESEE Countries

Financial Development and Economic Growth: The Role of Foreign-Owned Banks in CESEE Countries

Impact of Financial and Trade Openness on Financial Development in Emerging Market Economies: The Case of Turkey

Development of Financial Systems in 1995–2014: A Factor Analysis

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