Essays On Financial Market Development And Economic Growth

Essays On Financial Market Development And Economic Growth-6
Another aspect is the robustness analysis by including observations of different length.Such an approach constitutes the value added in the literature.

Another aspect is the robustness analysis by including observations of different length.Such an approach constitutes the value added in the literature.

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All the regression equations are estimated on the basis of Blundell and Bond’s GMM system estimator that is one of the best research techniques in the case of dynamic panel data growth regressions. Section Taking into account the multitude of financial system definitions, the discussion should be started with an explanation of how different authors understand this term. One group is characterized by the structural-institutional approach, in the other though it is functional approach.

Our results indicate that all the research hypotheses have been positively verified. The detailed overview of different available definitions of financial system, taking into account its functions, is done for example by Matysek-Jedrych ().

Quite on the contrary, the analysis indicates that economists’ views differ.

They can though be grouped in several streams (which have taken their origin in works of above mentioned authors), which makes it easier to make the overview of the problem of the influence of the financial system on the economic growth or speaking more in detail, the development of the financial system on economic growth.

Our results indicate that all the research hypotheses have been positively verified.

There are many factors that can be treated as economic growth determinants. The institutional framework of the financial system as well as its performance are no doubt important determinants of output growth.The author makes an attempt herself to define the financial system, saying that it is the structure of “interconnected financial institutions, financial markets and elements of financial system infrastructure; through this structure, entities belonging to real environment (first of all households, enterprises and government) can source funding, invest savings and satisfy the rest of their needs relating to financial aspect of their functioning” (Matysek-Jedrych , p. Based on the analysis of publications across the span of several decades it is clear that the interest in the financial system is rising.Research covers its different elements, as well as interrelations among them, and more often, especially as the result of the last crisis, the identification of risks for its stable and effective functioning, indicating, among others the occurrence of system risk.The analysis covers the 28 EU and 34 OECD economies and the 1993–2013 period.The following variables are used to measure the financial sector: domestic credit provided by financial sector, bank nonperforming loans, bank capital to assets ratio, market capitalization of listed companies, turnover ratio of stocks traded, and the monetization ratio.Second, what is exactly the stability of the financial system and how can it be measured on the basis of statistical data?The problems regarding the relationship between the financial sector and economic growth strengthened after the last global crisis and the crisis in the euro zone.The following three research hypotheses are tested: /H1/ The relationship between financial sector development (stability) and economic growth is nonlinear; /H2/ An excessively large size of the financial system does not lead to more rapid economic growth: it may even negatively affect GDP dynamics; /H3/ The inclusion of the post-crisis period gives new insights of the nature of the relationship between financial system and economic growth.We also present a wide literature review on the issues regarding the stability of the financial sector and the impact of the financial sector development on economic growth.A new element of the empirical analysis is the application of the extended econometric and economic modelling, including testing nonlinear relationships, analyzing both levels and changes of the financial variables, as well as estimating the models on the basis of a moving panel with overlapping observations.The regression equations are estimated by Blundell and Bond’s GMM system estimator.

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