The inter-linkages between financial and economic development in the European Union Countries

Abstract

The paper has investigated the relationships between financial and economic development in the European Union countries using annual data over the period of 1998-2016. The authors have done this by looking at descriptive statistics and also by applying econometric methods. This study has combined different approaches prevailing in the scientific literature and contributed to understanding the importance of the interrelationship between the variables. The investigation has led to the conclusions as follows: (1) the countries with the middle GDP per capita indicators have demonstrated the highest level of financial development; (2) unidirectional causality running from real GDP to financial development has been detected in Denmark, Portugal and Latvia; (3) unidirectional causality running from financial development to real GDP has been found in Austria; (4) two-way causal relationships between financial and economic development have been detected in Luxembourg, France and United Kingdom; (5) the results of Finland, Germany, Czech Republic, Slovakia, Croatia and Bulgaria have supported the neutrality approach. The research provides general insights and a better understanding to formulate the directions for sustainable economic development in the countries under consideration. ARTICLE HISTORY

Investigating the Finance-Energy-Growth Trilogy in Sub-Saharan Africa: Evidence From the NARDL Framework

“…Nonetheless, other studies validated the demand-following hypothesis that economic growth causes financial development (Ginevicˇius et al, 2019;Kassi et al, 2021). It stipulates that economic growth will lead to the emergence of financial products and institutions to meet the demand for financial services.…”

The Relationship Between the Development of the Financial Sector and the Economic Growth in the Republic of North Macedonia

“…The relevant empirical research uses multiplicative dummies to compare two distinct sub-periods before and after the crisis, where the results show that before crisis, financial development promoted economic growth, while after the crisis it hindered economic activity. The study of Ginevičius et al (2019) examined the relationship between financial and economic development in the countries of the European Union using annual data for the period 1998-2016, the authors did this by reviewing descriptive statistics and also by applying econometric methods. The Granger causality test showed that the authors found: (1) countries with an average GDP per capita indicator showed the highest level of financial development; (2) in Denmark, Portugal and Latvia, unidirectional causality has been discovered, from real GDP to financial development; (3) unidirectional causality running from financial development to real GDP has been found in Austria; (4) two-way causal links between financial and economic development have been identified in Luxembourg, France and the United Kingdom; (5) results from Finland, Germany, the Czech Republic, Slovakia, Croatia and Bulgaria supported the neutrality approach.…”

Possibilities and limits of modelling of long-range economic consequences of air pollution – A case study

“…Air pollution is of particular concern in countries with former centrally planned economies (as in the case of Hungary), due to low energy efficiency and a relatively weak legislative framework [ 33 , 34 ]. Hungary has seen a decline in air pollution in recent years [ 35 ], but this is due to the collapse of former industrial structure rather than to conscious policy measures [ [36] , [37] , [38] ].…”