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)
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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Find related papers by JEL classification: E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Mortgages O42 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Monetary Growth Models
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