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Whether Economic Growth is Affected by Lending to the Private Sector? The Case of North Macedonia

In: Economic Recovery, Consolidation, and Sustainable Growth

Author

Listed:
  • Dashmir Saiti

    (“University of Tetova”)

  • Borce Trenovski

    (University “Ss. Cyril and Methodius”)

Abstract

The subject of the research refers to the impact of bank loans on the private sector on the GDP growth rate per capita. Due to the possibility of a feedback relationship between economic growth and credit activity, the models were evaluated with the method of ordinary least squares (OLS) and with the generalized method of moments (GMM). The obtained results are entirely consistent, statistically significant, and well-adjusted. However, the endogeneity test in the GMM model shows that the variables for which a feedback relationship is assumed are exogenous. The growth of bank loans to the private sector has a statistically significant and positive impact on the GDP growth rate per capita. According to the evaluated asymmetric model, the coefficient in conditions of accelerated economic growth is 0.63. Bank loans to the private sector and the growth rate of GDP per capita have a non-linear relationship, in the form of an inverse U-curve, with a turning point of about 34% of GDP.

Suggested Citation

  • Dashmir Saiti & Borce Trenovski, 2023. "Whether Economic Growth is Affected by Lending to the Private Sector? The Case of North Macedonia," Springer Proceedings in Business and Economics, in: Abdylmenaf Bexheti & Hyrije Abazi-Alili & Léo-Paul Dana & Veland Ramadani & Andrea Caputo (ed.), Economic Recovery, Consolidation, and Sustainable Growth, pages 255-269, Springer.
    • Handle: RePEc:spr:prbchp:978-3-031-42511-0_16
    DOI: 10.1007/978-3-031-42511-0_16
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