The determinants of financial economy: inhibiting and encouraging factors

Savvas Zachariadis

Journal of Economic Studies, 2025, vol. 53, issue 2, 347-358

Abstract: PurposeIn this paper, financial growth is observed in the context of Minsky’s theory. Based on literature review, it is possible that large financial depth could eventually entail financial instability. The size of the financial enlargement with potential threats of instability could be defined by the volume and accessibility in credit. For this purpose, the macroeconomic determinants of financial depth are empirically investigated by using annual time series data for a specific group of countries from the Balkan and the Eastern European region.Design/methodology/approachThe economic system has become a matter of controversy. Most economies are currently functioning in an interdependent, globalized system. The amplification of the financial sector at the international level and the high degree of integration have rendered the debate on financial instability solemnly significant.FindingsThe goal is the identification of those factors with the greatest impact on the financial growth and, more precisely, those that stimulate credit as a key variable of financial enlargement. The impact is not only restricted to the positive movement.Originality/valueAll selected countries intentionally belong to a homogeneous group of economies in transition. Hence, a model based on panel data is constructed over a period from 1990 to 2020.

Keywords: Financial growth; Credit; Minsky; Financial instability; Transitional economies; Capital flows; Economic growth (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jespps:jes-12-2024-0865

DOI: 10.1108/JES-12-2024-0865

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