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The impact of macroeconomic performance on the stability of financial system in the EU countries

Author

Listed:
  • Mariusz Próchniak

    (Warsaw School of Economics)

  • Katarzyna Wasiak

    (Warsaw School of Economics)

Abstract

This study analyzes the relationship between macroeconomic performance and financial system stability in the theoretical and empirical perspective. The empirical part verifies the impact of a few macroeconomic variables on the financial system stability proxied by bank nonperforming loans to total gross loans, absolute change in the index of nominal effective exchange rate, the ROA and ROE indices for deposit takers. The analysis includes 28 EU countries and the 1996–2015 or 2006–2015 period. The results indicate that the increase in the GDP per capita level and the acceleration of economic growth as well as good fiscal stance all lead to greater stability of the financial sector.

Suggested Citation

  • Mariusz Próchniak & Katarzyna Wasiak, 2016. "The impact of macroeconomic performance on the stability of financial system in the EU countries," Collegium of Economic Analysis Annals, Warsaw School of Economics, Collegium of Economic Analysis, issue 41, pages 145-160.
  • Handle: RePEc:sgh:annals:i:41:y:2016:p:145-160
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    References listed on IDEAS

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    More about this item

    Keywords

    financial development; financial stability; financial sector; economic growth; panel data;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F37 - International Economics - - International Finance - - - International Finance Forecasting and Simulation: Models and Applications
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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