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The impact of macroeconomic performance on the stability of financial system in the EU countries

Mariusz Próchniak () and Katarzyna Wasiak
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Katarzyna Wasiak: Warsaw School of Economics

Collegium of Economic Analysis Annals, 2016, issue 41, 145-160

Abstract: This study analyzes the relationship between macroeconomic performance and financial system stability in the theoretical and empirical perspective. The empirical part verifies the impact of a few macroeconomic variables on the financial system stability proxied by bank nonperforming loans to total gross loans, absolute change in the index of nominal effective exchange rate, the ROA and ROE indices for deposit takers. The analysis includes 28 EU countries and the 1996–2015 or 2006–2015 period. The results indicate that the increase in the GDP per capita level and the acceleration of economic growth as well as good fiscal stance all lead to greater stability of the financial sector.

Keywords: financial development; financial stability; financial sector; economic growth; panel data (search for similar items in EconPapers)
JEL-codes: C23 F37 O47 (search for similar items in EconPapers)
Date: 2016
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Handle: RePEc:sgh:annals:i:41:y:2016:p:145-160