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Banking Sector Development and Economic Growth in Central and Southeastern Europe Countries

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  • Jordan Kjosevski

Abstract

The aim of this paper is to empirically examine the relationship between banking sector development and economic growth in 16 transition countries in Central and Southeastern Europe in the period from 1995 to 2010. We apply fixed-effects panel model and control for other relevant determinants of economic growth and endogeneity. We measure the level of banking sector development using the amount of bank credit allocated to the private sector as a share of GDP. The second variable for the level of financial sector development is the margin between lending and deposit interest rates. According to our results the amount of bank credit allocated to the private sector, apparently does not speed up economic growth in transition countries. The second variable, interest rate margin is negatively but not significantly associated with economic growth. Copyright CEEUN 2013

Suggested Citation

  • Jordan Kjosevski, 2013. "Banking Sector Development and Economic Growth in Central and Southeastern Europe Countries," Transition Studies Review, Springer;Central Eastern European University Network (CEEUN), vol. 19(4), pages 461-473, March.
    • Handle: RePEc:spr:trstrv:v:19:y:2013:i:4:p:461-473
    DOI: 10.1007/s11300-013-0258-6
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    2. Babar Ansari & Kanwal Gul & Aamir Feroz Shamsi & Nawaz Ahmad, 2017. "Un-Banking In Under-Developing Economy," IBT Journal of Business Studies (JBS), Ilma University, Faculty of Management Science, vol. 13(2), pages 72-93.
    3. Michiel Bijlsma & Clemens Kool & Marielle Non, 2018. "The effect of financial development on economic growth: a meta-analysis," Applied Economics, Taylor & Francis Journals, vol. 50(57), pages 6128-6148, December.
    4. Qamruzzaman, Md & Jianguo, Wei, 2020. "The asymmetric relationship between financial development, trade openness, foreign capital flows, and renewable energy consumption: Fresh evidence from panel NARDL investigation," Renewable Energy, Elsevier, vol. 159(C), pages 827-842.
    5. Babar Ansari & Kanwal Gul & Aamir Feroz Shamsi & Nawaz Ahmad, 2017. "Un-Banking In Under-Developing Economy," IBT Journal of Business Studies (JBS), Ilma University, Faculty of Management Science, vol. 13(2), pages 13-17.

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    More about this item

    Keywords

    Banking sector development; Economic growth; Central and Southeastern Europe; E44; G21;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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