<abstract xmlns="http://www.w3.org/1999/xhtml">

<p>This paper seeks to empirically explore how an international financial integration influences a country’s GDP growth. The long run relationship is tested by PMG estimator for the sample of ten EU countries from Central, Eastern and Southeastern Europe (CEE-10 countries) between 1995 and 2017. Prior to the conducting of dynamic panel analysis based on PMG estimators, several panel unit root tests were conducted, as well as panel co integration tests. The findings offer mixed impact financial integration on growth. Among the measures of financial integration, growth of the CEE-10 countries is mostly driven in the long run by FDI inflows as well as remittances and financial openness. On the contrary, the study suggests a reversal relationship between growth and financial integration measured by Gross Foreign Assets and Liabilities in percentages of GDP. It might be explained with a fact that CEE-10 countries have not yet reached a certain level of financial development in order to benefit from financial integration.</p>
<p>The study concludes that international financial integration does not per se enhance economic growth and country’s growth in the CEE-10 countries can be reached at a higher level of financial integration, further increase their financial openness and financial development.</p>
</abstract>

This paper seeks to empirically explore how an international financial integration influences a country’s GDP growth. The long run relationship is tested by PMG estimator for the sample of ten EU countries from Central, Eastern and Southeastern Europe (CEE-10 countries) between 1995 and 2017. Prior to the conducting of dynamic panel analysis based on PMG estimators, several panel unit root tests were conducted, as well as panel co integration tests. The findings offer mixed impact financial integration on growth. Among the measures of financial integration, growth of the CEE-10 countries is mostly driven in the long run by FDI inflows as well as remittances and financial openness. On the contrary, the study suggests a reversal relationship between growth and financial integration measured by Gross Foreign Assets and Liabilities in percentages of GDP. It might be explained with a fact that CEE-10 countries have not yet reached a certain level of financial development in order to benefit from financial integration.
The study concludes that international financial integration does not per se enhance economic growth and country’s growth in the CEE-10 countries can be reached at a higher level of financial integration, further increase their financial openness and financial development.

How Does International Financial Integration Really Affect Post-Transition Countries' Growth? Empirical evidence from the CEE-10 countries

Journal of Central Banking Theory and Practice

This work is licensed under the Creative Commons Attribution 4.0 International License.

This paper seeks to empirically explore how an international financial integration influences a country’s GDP growth. The long run relationship is tested by...

How Does International Financial Integration Really Affect Post-Transition Countries' Growth? Empirical evidence from the CEE-10 countries

Published Online: Sep 06, 2021

Page range: 117 - 136

Received: Apr 13, 2020

Accepted: Sep 09, 2020

DOI: https://doi.org/10.2478/jcbtp-2021-0027

Keywords
International Financial Integration, Economic Growth, Pooled Mean Group (PMG) estimator, Central, Eastern and Southeastern Europe

© 2021 Mehmed Ganić et al., published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.

How Does International Financial Integration Really Affect Post-Transition Countries' Growth? Empirical evidence from the CEE-10 countries

Published Online: Sep 06, 2021

Page range: 117 - 136

Received: Apr 13, 2020

Accepted: Sep 09, 2020

DOI: https://doi.org/10.2478/jcbtp-2021-0027

KeywordsInternational Financial Integration, Economic Growth, Pooled Mean Group (PMG) estimator, Central, Eastern and Southeastern Europe

© 2021 Mehmed Ganić et al., published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.

Keywords
International Financial Integration, Economic Growth, Pooled Mean Group (PMG) estimator, Central, Eastern and Southeastern Europe