Economic Growth Through Financial Development: Empirical Evidences from New Member States and Western Balkan Countries

Eglantina Hysa and Naqeeb Ur Rehman ()
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Naqeeb Ur Rehman: Westminster International University

Chapter Chapter 4 in Crisis after the Crisis: Economic Development in the New Normal, 2023, pp 49-67 from Springer

Abstract: Abstract This study provides some other pieces of evidence on the relation and the contribution of financial development to economic growth for two specific regions, such as the group of new members (NMS) of the EU and the Western Balkan countries (WBC). This study applies panel data using relevant proxies for the model. According to the study results and based on threshold regression, a non-linear association is confirmed between financial and economic growth. More specifically, the interaction effect of remittances and financial development complement the economic growth of NMS. In addition, the findings show that both, financial development and remittances, are pushing the reduction the economic growth in WBC. Although the NMS can be well-integrated with the rest of the EU countries, there is still room for improvement in governance and enterprise restructuring. To gain sustainable growth across developing countries, policymakers should target the following: (1) increasing the saving ratio to increase the productive investment; (2) narrowing interest rate margins to encourage domestic credit to the private sector.

Keywords: Financial Development; Remittances; Economic Growth; New Member States; Western Balkans (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:spr:prbchp:978-3-031-30996-0_4

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DOI: 10.1007/978-3-031-30996-0_4

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