Banking Sector Development and Household Saving in Emerging Eastern Europe

Ramiz Rahmanov

No wp1089, William Davidson Institute Working Papers Series from William Davidson Institute at the University of Michigan

Abstract: This article examines the impact of the banking sector development on households’ saving dynamics in the emerging economies of Eastern Europe. For this purpose, we use the mean group FMOLS estimator to estimate the saving function augmented with variables characterizing three dimensions of the banking sector development – depth, efficiency, and stability. The mean group results show that an increase in the depth and stability of the banking sector significantly stimulates saving, whereas an improvement in the efficiency has no significant effect on saving. Additionally, we find that an increase in the real GDP per capita and age dependency ratio significantly and positively affects saving, while an increase in the real interest rate has a significantly negative effect on saving.

Keywords: household saving; banking sector development; Eastern Europe (search for similar items in EconPapers)
JEL-codes: C33 E21 (search for similar items in EconPapers)
Pages: pages
Date: 2015-03-01
New Economics Papers: this item is included in nep-mac
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