Empirica – Journal of European Economics

Sponsored by the Austrian Economic Association and the Austrian Institute of Economic Research

Empirica publishes empirical and theoretical work on all economic aspects of European Integration. The topics may range from all challenges concerning the deepening of the European Union (Single Market, Lisbon Agenda, EMU) to enlargement and the external relations of the EU (globalisation).

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Mariusz Prochniak, Katarzyna Wasiak
The impact of the financial system on economic growth in the context of the global crisis: empirical evidence for the EU and OECD countries
Empirica, 2017, 44(2), pp.295-337, http://www.springer.com/10663
This study aims to analyse the impact of the development and stability of the financial sector on economic growth on the basis of the quantitative methods that produce robust results. The following research hypotheses are tested: H1: The relationship between financial sector development (stability) and economic growth is nonlinear. H2: An excessively large size of the financial system does not lead to more rapid economic growth; it may even negatively affect GDP dynamics. H3: The inclusion of the post-crisis period gives new insights of the nature of the relationship between financial system and economic growth. The analysis covers the 28 EU and 34 OECD economies and the 1993-2013 period. The following variables are used to measure the financial sector: domestic credit provided by financial sector, bank nonperforming loans, bank capital to assets ratio, market capitalisation of listed companies, turnover ratio of stocks traded, and the monetisation ratio. A new element of the empirical analysis is the application of the extended econometric and economic modelling, including testing nonlinear relationships, analysing both levels and changes of the financial variables, as well as estimating the models on the basis of a moving panel with overlapping observations. The regression equations are estimated by Blundell and Bond's GMM system estimator. Our results indicate that all the research hypotheses have been positively verified.
JEL-Codes:C23, F37, O47
Keywords:Economic growth, Empirical analysis, European Union, Financial development, Panel data
Research group:Macroeconomics and Public Finance
Language:English

Managing Editor

Univ.-Prof. MMag. Dr. Harald Oberhofer

Function: Senior Economist, Editor-in-Chief Empirica
Research groups: Industrial, Innovation and International Economics