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Financial Development and Economic Growth: Evidence from 10 New European Union Members
Author(s) -
Caporale Guglielmo Maria,
Rault Christophe,
Sova Anamaria Diana,
Sova Robert
Publication year - 2015
Publication title -
international journal of finance and economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.505
H-Index - 39
eISSN - 1099-1158
pISSN - 1076-9307
DOI - 10.1002/ijfe.1498
Subject(s) - economics , european union , financial sector , stock (firearms) , panel data , bank credit , financial market , finance , financial system , macroeconomics , international economics , monetary economics , mechanical engineering , engineering , econometrics
This paper reviews the main features of the banking and financial sector in 10 new European Union 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. Copyright © 2014 John Wiley & Sons, Ltd.