The Impact of Financial System Development on Economic Growth of Spain and Greece

Abstract

The article analyzes the main financial factors affecting the economic growth, as well as the factors that may impede the country’s sustainable economic development. The article analyzes the impact of financial sector on economic growth, using the examples of Greece and Spain. Due to the identification of financial factors, that cause the economic development of countries, it is possible to develop a complex of measures to reduce the negative effects of possible financial crises. The experience of the global monetary and financial crisis has largely demonstrated the interconnections between the financial sectors of countries in the world. The identified patterns of Greece and Spain financial system development will allow to develop a complex of measures to prevent financial crises in the future. The article analyzes financial indicators to identify the interdependence of processes occurring in the financial sector and the economies of Greece and Spain. In order to identify key factors affecting the economic growth of the country, it is necessary to conduct a comprehensive analysis of data in dynamics, responding to changes in the financial sector and in the economy as soon as possible. Similarly, the financial sector cannot be viewed in isolation from the global economy. Therefore, both endogenous and exogenous factors must be considered for forecasts and recommendations to achieve sustainable economic growth. The financial factors cited by the author will allow us to take into account the changing nature of the financial sector and to develop public policy under the volatile financial markets. In the future, given these factors, it will be possible to move on to developing a country-specific quantitative model, which in turn, will allow to develop recommendations for individual countries. Taking account of the European Central Bank’s experience in establishing and controlling the financial market, we can elaborate recommendations on the transformation of countries financial sector, as well as apply the results obtained to harmonize the economies of the candidate countries for integration into the European Union.

Keywords

• financial system
• financial factors
• economic growth
• greece
• spain
• fdi