Whether Economic Growth is Affected by Lending to the Private Sector? The Case of North Macedonia

Dashmir Saiti () and Borce Trenovski
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Dashmir Saiti: “University of Tetova”

A chapter in Economic Recovery, Consolidation, and Sustainable Growth, 2023, pp 255-269 from Springer

Abstract: Abstract The subject of the research refers to the impact of bank loans on the private sector on the GDP growth rate per capita. Due to the possibility of a feedback relationship between economic growth and credit activity, the models were evaluated with the method of ordinary least squares (OLS) and with the generalized method of moments (GMM). The obtained results are entirely consistent, statistically significant, and well-adjusted. However, the endogeneity test in the GMM model shows that the variables for which a feedback relationship is assumed are exogenous. The growth of bank loans to the private sector has a statistically significant and positive impact on the GDP growth rate per capita. According to the evaluated asymmetric model, the coefficient in conditions of accelerated economic growth is 0.63. Bank loans to the private sector and the growth rate of GDP per capita have a non-linear relationship, in the form of an inverse U-curve, with a turning point of about 34% of GDP.

Keywords: GDP per capita; Bank loans to the private sector; Republic of North Macedonia (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:spr:prbchp:978-3-031-42511-0_16

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DOI: 10.1007/978-3-031-42511-0_16

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