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Influence of Quantitative and Qualitative Factors of Banking Sector Development on Economic Growth in South East European Countries

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  • Vesna Babic- Hodovic

    ()
    (School of Economics and Business in Sarajevo, Bosnia and Herzegovina)

  • Eldin Mehic

    ()
    (School of Economics and Business in Sarajevo, Bosnia and Herzegovina)

  • Emir Agic

    ()
    (School of Economics and Business in Sarajevo, Bosnia and Herzegovina)

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    Abstract

    The aim of this article is to determine the level and the nature of the quantitative and qualitative factors' influences on development of the banking sector and their influence on economic growth in South-East European countries (SEE). We used a OLS model with panel-corrected standard errors (PCSE) and panel data from six transition countries for the period 1999-2006. We measure the qualitative development in the banking sector with the margin between deposit and lending interest rates (INT). Quantitative aspects of the banking sector were measured using variables: Domestic credit to private sector as share of GDP and variable Domestic credit provided by banking sector as share of GDP. Quantitative development of the banking sector affects the economic growth in the observed period, since variable Domestic credit provided by banking sector proved statistically significant. However, the second variable, Domestic credit to private sector, did not prove to be significant in the observed period. With respect to the results obtained for the qualitative banking sector development, the INT variable did not prove significant for economic growth.

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    File URL: http://www.efos.hr/repec/osi/journl/PDF/InterdisciplinaryManagementResearchV/IMR5a55.pdf
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    Bibliographic Info

    Article provided by Faculty of Economics in Osijek, Croatia in its journal Interdisciplinary Management Research.

    Volume (Year): 5 (2009)
    Issue (Month): ()
    Pages: 683-693

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    Handle: RePEc:osi:journl:v:5:y:2009:p:683-693

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    Related research

    Keywords: banking sector; economic growth; quantitative and qualitative financial sector development; South-East Europe; Europe; OLS with panel-corrected standard errors (PCSE);

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    1. Ross Levine, 1997. "Financial Development and Economic Growth: Views and Agenda," Journal of Economic Literature, American Economic Association, vol. 35(2), pages 688-726, June.
    2. Bencivenga, V.R. & Smith, B.D., 1988. "Financial Intermediation And Endogenous Growth," RCER Working Papers 124, University of Rochester - Center for Economic Research (RCER).
    3. Greenwood, J. & Jovanovic, B., 1988. "Financial Development, Growth, And The Distribution Of Income," RCER Working Papers 131, University of Rochester - Center for Economic Research (RCER).
    4. Oleh Havrylyshyn, 2001. "Recovery and Growth in Transition: A Decade of Evidence," IMF Staff Papers, Palgrave Macmillan, vol. 48(4), pages 4.
    5. Pagano, Marco, 1993. "Financial markets and growth: An overview," European Economic Review, Elsevier, vol. 37(2-3), pages 613-622, April.
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