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Financial Development and Economic Growth in Poland in Transition: Causality Analysis



This study examines the causal relationship between economic growth and financial development in Poland on the basis of quarterly data for the period 2000 Q1–2011 Q4. In order to examine the impact of the 2008 financial crisis on the structure of financial sector- GDP links in Poland we performed the empirical research for the full period and the precrisis subsample (covering the period 2000 Q1–2008 Q3). The empirical research was performed in two variants: bank- and stock market-oriented approaches. The results obtained for the pre-crisis subsample suggest causality running from stock market development to economic growth and from economic growth to banking sector development. This implies that the direction of the causality strongly depends on which particular area of the financial sector is considered. When the crisis data was also taken into consideration the test results suggested that during the 2008 financial crisis the banking sector had a much more significant impact on economic growth than before the crisis. On the other hand, the positive causal impact of the performance of the WSE on economic growth in Poland was significant before 2008, while during the crisis significant negative shocks occurred. The empirical results for both periods examined were found to be robust to the type of control variable applied and the specification of the testing procedure, which clearly validates the major conclusions of this paper.

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  • Henryk Gurgul & £ukasz Lach, 2012. "Financial Development and Economic Growth in Poland in Transition: Causality Analysis," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 62(4), pages 347-367, August.
  • Handle: RePEc:fau:fauart:v:62:y:2012:i:4:p:347-367

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    References listed on IDEAS

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    Cited by:

    1. Mikhail Stolbov, 2014. "How Are Interbank and Sovereign Debt Markets Linked? Evidence from 14 OECD Countries, the Euro Area and Russia," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 61(3), pages 331-348, June.
    2. SBIA, Rashid & Shahbaz, Muhammad & Ozturk, Ilhan, 2016. "Economic Growth, Financial Development, Urbanization and Electricity Consumption Nexus in UAE," MPRA Paper 74790, University Library of Munich, Germany, revised 24 Oct 2016.
    3. Saša Obradović & Milka Grbić, 2015. "Causality Relationship between Financial Intermediation by Banks and Economic Growth: Evidence from Serbia," Prague Economic Papers, University of Economics, Prague, vol. 2015(1), pages 60-72.
    4. RNuket Kirci Cevik & Sel Dibooglu & Ali M. Kutan, 2016. "Real and Financial Sector Studies in Central and Eastern Europe: A Review," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 66(1), pages 2-31, February.
    5. Polat, Ali & Shahbaz, Muhammad & Ur Rehman, Ijaz & Satti, Saqlain Latif, 2013. "Revisiting Linkages between Financial Development, Trade Openness and Economic Growth in South Africa: Fresh Evidence from Combined Cointegration Test," MPRA Paper 51724, University Library of Munich, Germany, revised 25 Nov 2013.

    More about this item


    financial development; economic growth; transition economies; Granger causality;

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy


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