Verification of “Too Much Finance” Hypothesis in Central and Eastern European Countries – Empirical Research

• Authors: Wojciech Grabowski , Iwona Maciejczyk-Bujnowicz

Title variants

Weryfikacja hipotezy „too much finance” w krajach Europy Środkowo‑Wschodniej – badanie empiryczne

• Languages of publication: EN

Abstracts

EN

This paper analyses the relationship between the domestic credit to GDP ratio and economic growth in a group of 11 countries in Central and Eastern Europe. The parameters of the econometric model used, were estimated using a pooled regression method and the Blundell‑Bond systemic estimator. The results of our empirical investigation show that the entire group can be divided into 3 homogeneous sub‑groups with different values of the optimal level of domestic credit to GDP ratio. Estimation of the parameters with the use of a panel model show that Latvia, Lithuania, Estonia and Slovakia would probably have reached a higher level of economic growth if the analysed coefficient had been at a level of 0.48. In the case of the sub‑group encompassing Poland, Czech Republic and Hungary, the optimal value of the analysed coefficient turned out to be 0.6. In the case of the Bulgaria, Croatia and Romania sub‑group, the development of the financial system, which is represented in this article by the ratio of domestic credit to GDP, does not seem to have any impact on the rate of growth of real GDP.

PL

Artykuł poświęcony jest analizie relacji między wskaźnikiem reprezentującym wartość udzielonych kredytów do PKB a wzrostem gospodarczym dla grupy jedenastu krajów Europy Środkowej i Wschodniej. Parametry modelu ekonometrycznego szacowane są za pomocą metody najmniejszych kwadratów oraz uogólnionej metody momentów przy wykorzystaniu estymatora Blundella‑Bonda. Wyniki badania empirycznego pokazują, że cała grupa może być podzielona na trzy jednorodne podgrupy o różnych wartościach optymalnego poziomu wskaźnika krajowego kredytu do PKB. Wyniki oszacowania parametrów modelu paneli pokazują, że Łotwa, Litwa, Estonia i Słowacja prawdopodobnie osiągnęłyby wyższy poziom wzrostu gospodarczego, jeżeli analizowany współczynnik wynosiłby 0,48. W przypadku Polski, Czech i Węgier optymalna wartość analizowanego współczynnika wyniosła 0,6. W przypadku Bułgarii, Chorwacji i Rumunii rozwój systemu finansowego wydaje się nie mieć żadnego wpływu na poziom wzrostu realnego PKB.

Keywords

EN

financial development; GDP growth; panel data model

PL

rozwój finansowy; tempo wzrostu PKB; model panelowy; rozwój finansowy; tempo wzrostu PKB; model panelowy

• Publisher: Uniwersytet Łódzki. Wydawnictwo Uniwersytetu Łódzkiego
• Journal: Acta Universitatis Lodziensis. Folia Oeconomica
• Year: 2019
• Volume: 1
• Issue: 340
• Pages: 115-132

Dates

published

2019-04-04

Contributors

author

Wojciech Grabowski

• University of Łódź, Faculty of Economics and Sociology, Department of Econometric Models and Forecasts

• https://orcid.org/0000-0002-6707-3736

author

Iwona Maciejczyk-Bujnowicz

• University of Łódź, Faculty of Economics and Sociology, Institute of International Economics, Department of Finance and International

• https://orcid.org/0000-0001-5789-3346

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Identifiers

DOI

10.18778/0208-6018.340.08