The Influence of Lending Activity on Economic Growth in Romania

Abstract

The banking system has the role to eliminate the fund deficit by transferring the capital towards investments in order to support the economic growth. Economic development it is possible if there is an adequate level of capital in the economy that will ensure efficient business conditions. Credit expansion allows consumers to borrow and spend more and businesses to borrow and invest more. Increasing consumption and investment creates jobs and expands income and profits. The study aims to analyze the impact that the banking system loans have on economic growth in Romania. The analysis involves a regression model where economic growth will be measured by the growth domestic product, considered the dependent variable and loans, interest rates and inflation, the independent variables.

Keywords

• credit
• economic growth
• inflation
• interest rate