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Economic growth in South-eastern Europe: the role of the banking sector

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  • Valerija Botric
  • Suncana Slijepcevic

Abstract

This article analyses the relationship between banking sector efficiency and economic growth using a panel data analysis of six South-eastern European countries during the period 1995-2005. The analysis is concentrated on the banking sector because other segments of the financial market are underdeveloped in our sample of countries. We measure the qualitative development in the banking sectors by using the margin between lending and deposit interest rates as well as the share of non-performing loans. By applying the panel data method in a growth-type equation setting, we confirm that improvements in banking sector efficiency, measured through the decreasing interest rate spread, exerted a positive influence on the growth rate of the countries in the region.

Suggested Citation

  • Valerija Botric & Suncana Slijepcevic, 2008. "Economic growth in South-eastern Europe: the role of the banking sector," Post-Communist Economies, Taylor & Francis Journals, vol. 20(2), pages 253-262.
    • Handle: RePEc:taf:pocoec:v:20:y:2008:i:2:p:253-262
    DOI: 10.1080/14631370802019005
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    1. Jacob A. Bikker, 2004. "Competition and Efficiency in a Unified European Banking Market," Books, Edward Elgar Publishing, number 2830.
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    Cited by:

    1. Dombi, Akos & Grigoriadis, Theocharis, 2017. "Ancestry, Diversity & Finance: Evidence from Transition Economies," Discussion Papers 2017/4, Free University Berlin, School of Business & Economics.
    2. Shrutikeerti Kaushal & Amlan Ghosh, 2016. "Financial Institutions and Economic Growth: An Empirical Analysis of Indian Economy in the Post Liberalized Era," International Journal of Economics and Financial Issues, Econjournals, vol. 6(3), pages 1003-1013.
    3. ARIC Kıvanç Halil & ERKEKOĞLU Hatice, 2014. "The Effect Of Financial Development On Growth In Countries Joining The Eu After 2004: A Panel Data Analysis," Revista Economica, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 66(3), pages 60-71.

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