tailieunhanh - Impact of bank credits on economic growth and inflation

Economic functioning will be realized non-problematically to an extent that countries can achieve financial deepening. Financial deepening will provide an important role for particularly transferring funds that are created by banks to real sector. Whether domestic credits created by banking sector have any effect on macro-economic variables such as inflation and economic growth for 10 chosen European countries was tested via panel data analysis. Annual data for 2006-2012 were used. As a result of panel data analysis, it was proved that domestic credits created by banking sector for 10 European countries did not affect inflation but did affect economic growth. | Journal of Applied Finance Banking vol. 5 no. 1 2015 57-69 ISSN 1792-6580 print version 1792-6599 online Scienpress Ltd 2015 Impact of Bank Credits on Economic Growth and Inflation Suna Korkmaz1 Abstract Economic functioning will be realized non-problematically to an extent that countries can achieve financial deepening. Financial deepening will provide an important role for particularly transferring funds that are created by banks to real sector. Whether domestic credits created by banking sector have any effect on macro-economic variables such as inflation and economic growth for 10 chosen European countries was tested via panel data analysis. Annual data for 2006-2012 were used. As a result of panel data analysis it was proved that domestic credits created by banking sector for 10 European countries did not affect inflation but did affect economic growth. Jel classification numbers E51 C53 O47 G21 E31 Keywords Bank Credits Inflation Economic Growth. 1 Introduction In history of economics banking emerged with development of exchanger stores in the 15th and 16th centuries. Banks demonstrated development within historical process and became institutions that were assistant to economic and commercial activities and even more regulatory institutions for them in the 19th century. Existence of a smoothly operating and non-fragile financial structure in developing countries is one of the most crucial indicators for economic growth. So banks that are present in this financial structure appear as institutions which facilitate economic life. Banks are institutions that conduct operations on money capital and credits and fulfill every need of natural and juridical persons state and businesses in this field. Among primary functions of banks collecting deposits from clients preserving them and lending some part of their collected deposits in exchange for a certain price can be counted. In general banks assume an 1Balikesir University Bandirma Faculty of Economics and .

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