Journals Information
Universal Journal of Accounting and Finance Vol. 10(2), pp. 584 - 590
DOI: 10.13189/ujaf.2022.100223
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Development of the Financial Sector and Its Impact on Economic Growth in the Western Balkans
Rovena Vangjel *, Jonada Mamo
Finance - Accounting Department, Business Faculty, Aleksand毛r Moisiu University of Durr毛s, Albania
ABSTRACT
The objective of this paper is to assess whether financial development may impact economic growth in the Western Balkans over the period 2005鈥�2019. Development of financial sector is measured by credit to private sector, broad money, non-performing loans, and interest-rate spread. Economic growth is measured by the annual growth in GDP as a dependent variable. Empirically, panel data were used for six countries in the Western Balkans, specifically testing for random effects method (REM) and fixed effects method (FEM). First, we employed the descriptive and correlation matrices to determine whether the model is valid. To guide the selection of the REM or FEM, we ran a Hausman test, which resulted in an FEM across countries. The main conclusions of the paper are: (1) The economic growth is affected positively by the efficiency of banking sector; (2) The increase in depth and size of banking sector shows less relevance in economic growth. The insignificance of broad money and the negative effect of private credit, we can conclude that, for this period, these countries may have low levels of financial intermediation, or the amount of finance used by businesses and the financial sector is not productive for the economy.
KEYWORDS
Economic Growth, Financial Development, Panel Data Models, Financial Sector
Cite This Paper in IEEE or APA Citation Styles
(a). IEEE Format:
[1] Rovena Vangjel , Jonada Mamo , "Development of the Financial Sector and Its Impact on Economic Growth in the Western Balkans," Universal Journal of Accounting and Finance, Vol. 10, No. 2, pp. 584 - 590, 2022. DOI: 10.13189/ujaf.2022.100223.
(b). APA Format:
Rovena Vangjel , Jonada Mamo (2022). Development of the Financial Sector and Its Impact on Economic Growth in the Western Balkans. Universal Journal of Accounting and Finance, 10(2), 584 - 590. DOI: 10.13189/ujaf.2022.100223.