Steps in The Development of The Romanian Financial System and The Correlation with The Level of Economical Growth
AbstractAlong the history it has been asserted that among the determinant agents of the economical growth can be also cited the conservation and the endowment with physical, technological and human capital. This thing involves the realization of certain investigations in the infrastructure, development, and innovation, as well as in the education and the formation, that can raise the existent level of these resources in every country and to lead to a growth in the productivity, and in the competition of that country materialized through a higher GDP of a capital. But there is an extremely important factor like the way of financing, the degree of development of the financial system of the economy that leads to economical growth. On a microeconomic level, in what concerns the economical agents, financing is the most important for the development. All in all, no matter how good the product or how efficient the commercialization channels or the correlation level between technology and the human factor may be, if the business does not have an efficient financing politics, regarding the liquidity as well as the solvency and the profitableness, it will crash minimizing the other successfully realized aspects. Except the fact that it offers an efficient allocation and a reduced cost of the financial services, a well developed financial compartment identifies the potential investors, monitors and gives information regarding the behavior of the beneficiaries of the chartered capital. The financial system unifies the capital demand and the offer through banks, capital markets, and other financial mediates like mutual funds or pension funds. An efficient financial system mobilizes the collected saving by the unities that, after they satisfy their own objectives of investment and consumption, have a financing capacity for channeling it towards those units that, for realizing their investing objectives, need financing, offer an efficient payment and clearing system, in this way facilitating the financial transactions. An efficient system is the one that realizes an optimum getting in and allocation of the resources, that it has realized in a satisfying manner the remuneration conditions, assurance, and liquidity of the equivalent deposits or the instruments of collecting the resources, and on the other hand, the cost conditions and financing term for the allocated resources. Until short time ago, it was believed that the financial system develops after the contracting sector, channeling towards investments, at the request of the undertaker, the over pluses obtained as a consequence of the economies of the population. Following what Schumpeter first expressed in 1912, recent theories showed that an efficient financial system is a stimulus for the technological innovation identifying and financing the undertakers capable to successfully innovate the product and the production process. One of those who have opted for this kind of thought is Ross Levine who assures the fact that “a theoretical as well as an empirical constant work volume tends to make even the most skeptical to believe that the development of the financial system is a determinant of the economical growth, and not only a passive answer to this growth.” Levine and the others that share his opinion believe that there are inherent relations between financial intermediate and productivity and , as the amelioration of the productivity level produces on a long term benefic effects on the level of economic development, it can be said that also the financial intermediate generates economical growth. Moreover, Levine suggests that the development of the financial system has an important positive effect over the economical growth saying that “it can be eliminated a third of the already existent inequality between the countries with an important growth and those with a slow growth through the development of the financial intermediation for the latter ones until they reach a developing level comparable with the one of the countries with a quick development”. The positive association between the degree of development of the financial system and economical growth was at large analyzed also by Demirguc-Kunt (2006), Levine and King (1993), and Levine and Beck (2004). They get to the conclusion that this correlation stays significant even when other factors of influence are taken into consideration. Moreover, they prove that regarding a country with a developing financial system, the degree of financial development is correlated not only with the current growth, but also with the future economical growth. In order to do a thorough analysis of the way in which the Romanian financial system evolved, being correlated with the economical growth of the financing structure of the Romanian economy between 1990 and 2006, we leveled this analysis depending on the mutations that took place during the time in the Romanian economical and financial landscape. We have taken one by one the mutations that took place during this period regarding the Romanian banking system and capital market, as main financial agents, then the macro economical politics and their impact on the development of the financial system, and, least but not last, recent evolutions experienced by the Romanian financial system and regional level (Central and Eastern Europe) and European Union comparisons.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by West University of Timisoara, Romania, Faculty of Economics and Business Administration in its journal Timisoara Journal of Economics.
Volume (Year): 1 (2008)
Issue (Month): 1 ()
Postal: 16 J. H. Pestalozzi Street, 300115, Timisoara, Romania
Other versions of this item:
- Corduneanu, Carmen & Iovu, Laura Raisa, 2008. "Steps in the development of the Romanian financial system and the corellation with the level of economical growth," MPRA Paper 12571, University Library of Munich, Germany.
- G20 - Financial Economics - - Financial Institutions and Services - - - General
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Colin Mayer & Wendy Carlin, 1999.
"Finance, Investment and Growth,"
Economics Series Working Papers
1999-FE-09, University of Oxford, Department of Economics.
- Beck, T.H.L., 2006.
"Creating an efficient financial system: Challenges in a global economy,"
Open Access publications from Tilburg University
urn:nbn:nl:ui:12-3508413, Tilburg University.
- Beck, Thorsten, 2006. "Creating an efficient financial system : challenges in a global economy," Policy Research Working Paper Series 3856, The World Bank.
- Franklin Allen & Wei-Ling Song, 2005. "Financial Integration and EMU," European Financial Management, European Financial Management Association, vol. 11(1), pages 7-24.
- Beck, Thorsten & Demirguc-Kunt, Asli & Levine, Ross & Maksimovic, Vojislav, 2000. "Financial structure and economic development - firm, industry, and country evidence," Policy Research Working Paper Series 2423, The World Bank.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Romeo Margea).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.