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Sustainability 2017, 9(3), 335; doi:10.3390/su9030335

Financial Development and Economic Growth: The Role of Foreign-Owned Banks in CESEE Countries

1
School of Economics and Statistics, Milan-Bicocca University, 20126 Milano, Italy
2
Institute of Finance, Warsaw School of Economics, 02-554 Warszawa, Poland
3
National Bank of Poland, 00-919 Warszawa, Poland
4
Institute of Econometrics, Warsaw School of Economics, 02-554 Warszawa, Poland
*
Author to whom correspondence should be addressed.
Academic Editor: Yongrok Choi
Received: 28 December 2016 / Revised: 15 January 2017 / Accepted: 20 February 2017 / Published: 3 March 2017
(This article belongs to the Section Economic, Business and Management Aspects of Sustainability)
View Full-Text   |   Download PDF [1014 KB, uploaded 3 March 2017]   |  

Abstract

This study focuses on the role of financial development in the economic growth of Central, Eastern and South-Eastern European (CESEE) countries in the post-communist era (1995–2014), which coincides with the opening up of financial markets to foreign investors and the global financial crisis. We investigate whether economic growth in CESEE countries has benefited from the presence of foreign-owned banks. To this end, we introduce some refined measures of financial development and control for banks’ financial strength. Our results challenge the idea that bank credit fosters economic growth and that foreign-owned banks are indisputably a positive addition to local markets able to foster economic growth. View Full-Text
Keywords: financial development; economic growth; foreign-owned banks; post-communist economies financial development; economic growth; foreign-owned banks; post-communist economies
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This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).

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MDPI and ACS Style

Bongini, P.; Iwanicz-Drozdowska, M.; Smaga, P.; Witkowski, B. Financial Development and Economic Growth: The Role of Foreign-Owned Banks in CESEE Countries. Sustainability 2017, 9, 335.

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