Revisiting Finance and Growth in Transition Economies - A Panel Causality Approach

Abstract : This article provides new evidence on the relationship between financial development and economic growth in 15 Eastern European countries between 1994 and 2014. The analysis employs a panel Granger causality framework that is based on seemingly unrelated regression systems and Wald tests with country-specific bootstrap critical values. By relying on several financial development indicators, we find that finance primarily follows GDP per capita in transition economies, supporting a demand-driven hypothesis. In contrast, financial development in the form of financial monetization and credit extension exerts in the majority of countries a negative impact on economic growth. Moreover, a strong foreign bank presence seems to positively impact growth, presumably driven by more efficiency and prudential lending behavior.
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Documents de travail du Centre d'Economie de la Sorbonne 2017.22 - ISSN : 1955-611X. 2017
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Dernière modification le : vendredi 19 mai 2017 - 01:08:57

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Michael Stemmer. Revisiting Finance and Growth in Transition Economies - A Panel Causality Approach. Documents de travail du Centre d'Economie de la Sorbonne 2017.22 - ISSN : 1955-611X. 2017. <halshs-01524462>

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