Finance and Growth Nexus: CEE & Central Asia and Beyond

Buuruljin Enkhbold Finance and Growth Nexus: CEE & Central Asia and Beyond Abstract (English) This thesis investigates the effect of financial development on economic growth using both global sample and regional samples focusing on Central and Eastern Europe (CEE) and Central Asia during the time period 1960-2013. The results of fixed effect panel and system GMM estimators suggest that the effect of private credit on growth had been neutral until 2007 and the effect turns negative if the time period is up to 2013. The negative effect of private credit on growth has been the largest for CEE and Central Asia, particularly for non-EU countries in the region. Stock market capitalisation and lending deposit spread have consistent effects regardless of the choice of time frame which implies that economies benefit from larger stock markets and lower lending deposit spread. Keywords: financial development, credit, stock market, spread, growth, CEE and Central Asia, generalized method of moments (GMM