NDLI: Uncovering the Dynamic Relationship between Credit and Sustainable Economic Growth in Selected CEE Countries

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Uncovering the Dynamic Relationship between Credit and Sustainable Economic Growth in Selected CEE Countries

Content Provider	MDPI
Author	Adam, Altăr Kubinschi, Matei Zaharia, Alina
Copyright Year	2021
Description	Establishing a functional financial sector has been one of the pillars of transition to a functional market economy over the last three decades in the CEE region. The present paper provides a comprehensive analysis of the relationship between credit and economic growth in selected CEE countries, namely, Czechia, Romania, Poland and Hungary, aiming to answer questions related to (i) the role of the banking sector in fostering sustainable economic growth and the causality direction between the financial and real sector, (ii) the relationship between consumption and investment and certain categories of loans and (iii) the identification of loan supply shocks and their role in explaining the dynamics associated with other macroeconomic variables. Using a time-varying parameter structural vector autoregression model with stochastic volatility (TVP-SVAR) and sign restrictions, we identify a non-financial corporations (NFC) credit supply shock and an investment shock. Potential policy solutions to ensure a sound contribution of the financial sector to economic growth in the analyzed economies relate to the strong relationship identified between the two variables. From this perspective, the study is among the first to employ a robust dynamic framework for assessing the role of the financial sector in fostering sustainable economic growth in European emerging market economies.
Starting Page	6349
e-ISSN	20711050
DOI	10.3390/su13116349
Journal	Sustainability
Issue Number	11
Volume Number	13
Language	English
Publisher	MDPI
Publisher Date	2021-06-03
Access Restriction	Open
Subject Keyword	Sustainability Social Sciences, Interdisciplinary Credit Sustainable Economic Growth Structural Models Financial Intermediation Bayesian Estimation Cee Countries
Content Type	Text
Resource Type	Article

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