Financial development and economic growth : evidence from ten new EU members

Caporale, Guglielmo Maria and Rault, Christophe and Sova, Robert and Sova, Anamaria (2009) Financial development and economic growth : evidence from ten new EU members. Centre for International Capital Markets discussion papers, 2009 (20). pp. 1-40. ISSN 1749-3412

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Abstract

This paper reviews the main features of the banking and financial sector in ten new EU members, and then examines the relationship between financial development and economic growth in these countries by estimating a dynamic panel model over the period 1994-2007. The evidence suggests that the stock and credit markets are still underdeveloped in these economies, and that their contribution to economic growth is limited owing to a lack of financial depth. By contrast, a more efficient banking sector is found to have accelerated growth. Furthermore, Granger causality test indicate that causality runs from financial development to economic growth, but not in the opposite direction.

Item Type: Article
Uncontrolled Keywords: Centre for International Capital Markets discussion papers; CICM discussion papers; financial development; economic growth; causality tests; transition economies
Subjects: 300 Social sciences > 330 Economics
Department: Guildhall School of Business and Law
Depositing User: Mary Burslem
Date Deposited: 21 Apr 2015 11:55
Last Modified: 21 Apr 2015 11:55
URI: http://repository.londonmet.ac.uk/id/eprint/453

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