FINANCIAL STABILITY AND ECONOMIC GROWTH: SOUTH AND EASTERN EUROPEAN COUNTRIES

Abstract

The growth of the financial sector in most countries has not been simultaneous with obtaining long-term financial macroeconomic stability for them. Studies in the literature have focused mainly on the level of public spending and fiscal deficit, and less on the lending sector in the economy. This study analyzes the role played by the development of the credit sector in macroeconomic stability, in the period 1995-2019. The countries chosen for the analysis are the countries of South Eastern Europe. The results show that in the long run the growth of the credit sector has had a beneficial effect on the economies, with two notable exceptions, however, Greece and Montenegro.

Keywords

• financial stability;
• economic growth;
• ardl model;