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Title:Financial development and economic growth: evidence from ten new EU members PDF Logo
Authors:Caporale, Guglielmo Maria
Rault, Christophe
Sova, Robert
Sova, Anamaria
Issue Date:2009
Series/Report no.:Discussion papers // German Institute for Economic Research 940
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.
Subjects:Financial development
economic growth
causality tests
transition economies
JEL:E44
E58
F36
P26
Document Type:Working Paper
Appears in Collections:Publikationen von Forscherinnen und Forschern des DIW
DIW-Diskussionspapiere

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