Financial Sector Development and Economic Growth - Evidence for Southeastern Europe

Leasing, Credit and Economic Growth: Evidence for Central and South Eastern Europe

“…29 The same applies to domestic credit and private credit, which produced significantly positive outcomes entering the regressions with two-year lags. These findings partly disagree with earlier results for transition countries of Mehl et al (2006), Fink et al (2006b and Hagmayr and Haiss (2007). 30 Mehl et al (2006) 29 The positive effects might be triggered to a high degree by equipment leasing since this form of leasing is much more widespread than real estate leasing.…”

“…We also find a negative effect of non-performing loans, though the levels of non-performing loans went down over time in this sample of Central and South Eastern European countries. The results of Hagmayr and Haiss (2007) show a positive, but insignificant impact of domestic credit and a negative and significant effect of private credit. Since the time frame of these authors includes earlier years with higher ratios of non-performing loans, which could be strongly reduced during our more recent time frame, this might explain the disparity in findings.…”

“…The basic structure of this study follows the work of Fink et al (2006b) and Hagmayr and Haiss (2007) who use an enhanced version of the production function model developed by Mankiw et al (1992). Mankiw et al (1992) In the second and third regressions, the different financial variables are used with one-year and two-year lags in order to mitigate potential simultaneity problems between financial development and output growth and to check for the direction of the relationship between these two variables (Levine and Zervos, 1998;Wachtel, 2001).…”

“…Studying South Eastern European countries, Fink, Haiss and von Varendorff (2007) and Hagmayr and Haiss (2007) argue that financial market segments can only contribute to growth in a positive way if legal and supervisory frameworks work properly. 16 The inclusion of stock market development into the investigation of the finance-growth nexus in transition countries mainly turned out to be insignificant.…”

“…Roessl and Haiss (2008) find that foreign banks only mildly influence portfolio investment and stock markets. Although various authors find that the weak legal situation and low availability of collateral in transition countries can contribute to limit the loan supply by banks (Bonin and Wachtel, 2002;Wagner and Iakova, 2001) and point at the importance of sound legal frameworks and institutions in these countries (Mehl and Winkler, 2003;Hagmayr and Haiss, 2007), previous studies investigating the finance-growth nexus hardly took into consideration alternative sources of finance other than stock and bond markets. Coricelli et al (2005), Delanny and Weill (2004) and Fisman and Love (2003) are notable exceptions with regard to trade credit.…”