Influence of Quantitative and Qualitative Factors of Banking Sector Development on Economic Growth in South East European Countries

Vesna Babic- Hodovic (), Eldin Mehic () and Emir Agic ()
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Vesna Babic- Hodovic: School of Economics and Business in Sarajevo, Bosnia and Herzegovina
Eldin Mehic: School of Economics and Business in Sarajevo, Bosnia and Herzegovina
Emir Agic: School of Economics and Business in Sarajevo, Bosnia and Herzegovina

Interdisciplinary Management Research, 2009, vol. 5, 683-693

Abstract: The aim of this article is to determine the level and the nature of the quantitative and qualitative factors' influences on development of the banking sector and their influence on economic growth in South-East European countries (SEE). We used a OLS model with panel-corrected standard errors (PCSE) and panel data from six transition countries for the period 1999-2006. We measure the qualitative development in the banking sector with the margin between deposit and lending interest rates (INT). Quantitative aspects of the banking sector were measured using variables: Domestic credit to private sector as share of GDP and variable Domestic credit provided by banking sector as share of GDP. Quantitative development of the banking sector affects the economic growth in the observed period, since variable Domestic credit provided by banking sector proved statistically significant. However, the second variable, Domestic credit to private sector, did not prove to be significant in the observed period. With respect to the results obtained for the qualitative banking sector development, the INT variable did not prove significant for economic growth.

Keywords: banking sector; economic growth; quantitative and qualitative financial sector development; South-East Europe; Europe; OLS with panel-corrected standard errors (PCSE) (search for similar items in EconPapers)
JEL-codes: E58 G21 O42 (search for similar items in EconPapers)
Date: 2009
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