Economic Convergence in South-Eastern Europe: Will the Financial Sector deliver?
- Morten Balling()
The rhythm of financial development in south-eastern Europe has accelerated. In a setting of low inflation and robust growth, domestic credit and cross-border flows are expanding. This process can strengthen real convergence by supporting productivity gains that enhance competitiveness and a smooth servicing of external liabilities. But such an outcome is not guaranteed. It depends on a favourable investment climate. Otherwise a normal expansion of household borrowing and housing investment might not be balanced by rising financial support for the traded goods sector, implying weak foundations for sustained growth. EU Accession - with its potential for trade and investment integration, and an acquis-based strengthening of institutions - improves the chances of good outcomes. It also triggers accelerated financial development, including through the role of EU-15 banks. There is a setting that raises the stakes for policy: it can spur the expansion of the productive economy; but it can also magnify distortions, as seen in the proliferation of unhedged foreign currency borrowing. Prudent fiscal policies and bold structural reforms are needed to underpin the medium-term outlook for growth and forestall risks of financial stress.
|This book is provided by SUERF - The European Money and Finance Forum in its series SUERF Studies with number 2007/2 and published in 2007.|
|Contact details of provider:|| Postal: SUERF c/o OeNB, Otto-Wagner-Platz 3, A-1090 Vienna, Austria|
Phone: +43/1/404 20 7216
Fax: +43/1/404 20 7298
Web page: http://www.suerf.org
More information through EDIRC
|Order Information:|| Postal: SUERF c/o OeNB, Otto-Wagner-Platz 3, A-1090 Vienna, Austria|
When requesting a correction, please mention this item's handle: RePEc:erf:erfstu:45. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dragana Popovic)
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.