Financial Development and Economic Growth: the Role of Foreign-Owned Banks in Cesee Countries
Our paper focuses on the role of financial development in economic growth in CEESE countries considering a time span that covers the post-communist era – with its opening up of financial markets to foreign investors – and the impact of the global financial crisis. Our research question is as to whether CESEE countries have benefited from foreign-owned banks’ presence in terms of higher economic growth. We contribute to the long-lasting debate on finance and growth through the use of more refined measures of financial development and focusing on the potential role of foreign-owned banks in local markets. Our results challenge the idea that bank credit fosters economic growth and that foreign-owned banks are a source of innovation, with positive spillover effects.
Area: Banking
Keywords: financial development, economic growth, foreign-owned banks, post-communist economies
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