Financial deepening and economic growth in the Western Balkans

University essay from Lunds universitet/Nationalekonomiska institutionen

Abstract: This paper explores whether financial deepening that occurred in the Western Balkans during the past decades had a significant impact on economic growth. We take into account different measures of financial deepening and estimate their impact on economic growth using panel data for seven countries over a period of thirty years. Our findings differ from expectations that financial deepening accelerates economic growth, but are in line with the findings of recent studies which emphasize that financial deepening at certain levels might become a drawback for economic growth.

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