The Role of Financial Sector in Driving Economic Growth

Jan Chmielewski; Sebastian Wawrzak

doi:10.18778/2391-6478.3.47.09

Authors

Jan Chmielewski SGH Warsaw School of Economics https://orcid.org/0009-0009-5671-5172
Sebastian Wawrzak SGH Warsaw School of Economics https://orcid.org/0000-0001-6897-490X

DOI:

https://doi.org/10.18778/2391-6478.3.47.09

Keywords:

economic growth, financial sector, credit, inflation, savings, unemployment

Abstract

The purpose of the article. This study verifies whether multidimensional financial-sector development – measured with the IMF composite indices of depth (FDI), access (FMI) and efficiency (FII) – influences key macroeconomic and social outcomes in ten high-income EU economies between 2010 and 2023.

Methodology. Standardized annual data was taken from the World Development Indicators and the IMF Financial Development Index Database. Pearson correlation coefficients were calculated for each country and variable pair. The statistical findings were then interpreted case-by-case to capture both short-term relationships and structural patterns.

Results of the research. Greater financial depth proved positively related to price stability and to an expansion of private-sector credit. In the short run, however, it showed no significant effect on GDP growth and coincided with a fall in household saving rates and a temporary rise in unemployment – evidence of the nonlinear, stage-dependent nature of the finance-growth nexus. The findings imply that policy makers in advanced economies should focus on balancing further financial deepening with safeguards that counteract labor-market frictions and excessive consumption growth.

Downloads

Download data is not yet available.

References

Acemoglu, D. (2009). Introduction to Modern Economic Growth. Princeton University Press, Princeton, ISBN: 9780691132921.

Ashenafi, B.B., Dong, Y. (2022). Financial Inclusion, FinTech, and Income Inequality in Africa. FinTech, 1(4), p. 376–387. https://doi.org/10.3390/FinTech1040028 DOI: https://doi.org/10.3390/fintech1040028

Barro, R., Sala-i-Martin, X. (2004). Economic Growth. MIT Press, Cambridge, ISBN: 0-262-02553-1.

Barro, R.J. (1997). Determinants of Economic Growth: A CrossCountry Empirical Study. MIT Press, Cambridge, ISBN: 9780262522540.

Barro, R.J. (1991). Economic Growth in a Cross Section of Countries. Quarterly Journal of Economics, vol. 106(2), p. 407–443. https://doi.org/10.2307/2937943 DOI: https://doi.org/10.2307/2937943

Beck, T. (2002). Financial Development and International Trade: Is the Link Causal?, Journal of International Economics, vol. 57(1), p. 107–131. https://doi.org/10.1016/S0022-1996(01)00131-3 DOI: https://doi.org/10.1016/S0022-1996(01)00131-3

Brigham, E.F., Houston, J.F. (2009). Fundamentals of Financial Management. Cengage, Boston.

Bukowski, S.I. (2012). Rozwój rynków finansowych a wzrost gospodarczy w obszarze Euro12. Acta Universitatis Lodziensis. Folia Oeconomica, 268, p. 39–55. http://hdl.handle.net/11089/1784

Cohen, J. (1988). Statistical Power Analysis for the Behavioral Sciences. Lawrence Erlbaum Associates, Hillsdale. https://doi.org/10.4324/9780203771587

Fry, M.J. (1997). In Favour of Financial Liberalisation. Economic Journal, vol. 107(442), p. 754–770. https://doi.org/10.1111/1468-0297.00273 DOI: https://doi.org/10.1111/j.1468-0297.1997.tb00041.x

Góra, M. (2003). System emerytalny, Polskie Wydawnictwo Ekonomiczne, Warszawa.

Greene, W.H. (2018). Econometric Analysis, 8th ed. Pearson, London, ISBN: 0134461363.

Gruszewska, E. (2007). Rozwój i czynniki rozwoju gospodarczego. Wydawnictwo Uniwersytetu w Białymstoku. http://hdl.handle.net/11320/14847

GUS. (2025). Produkt krajowy brutto w 2024 r. – szacunek wstępny, Główny Urząd Statystyczny.

Hedley, K., Petit dit de la Roche J.C., Banerjea, S. (2015). Banking 2015: a classic strategy battle of scale vs focus. Strategy & Leadership, 34(3), pp. 51–58. https://doi.org/10.1108/10878570610700875 DOI: https://doi.org/10.1108/10878570610700875

IMF. (2023). Financial Development Index Database: Methodological Note, International Monetary Fund, Washington D.C. https://legacydata.imf.org/?sk=f8032e80-b36c-43b1-ac26-493c5b1cd33b

Jaroszek, B., Kołodziej, J. (2023). Raport o obrocie gotówkowym w Polsce w 2022 r. Narodowy Bank Polski, https://nbp.pl/wp-content/uploads/2024/09/Raport-o-obrocie-gotowkowym-2023.pdf

Keynes, J.M. (1936). The General Theory of Employment, Interest, and Money. Macmillan. https://doi.org/10.1007/978-3-319-70344-2

King, R.G., Levine, R. (1993). Finance and Growth: Schumpeter Might Be Right. Quarterly Journal of Economics, vol. 108(3), p. 717–737. https://doi.org/10.2307/2118406 DOI: https://doi.org/10.2307/2118406

Krugman, P., Wells, R. (2020). Ekonomia, Polskie Wydawnictwo Ekonomiczne, Warszawa, ISBN: 978-83-01-21314-5.

Levine, R. (2005). Finance and Growth: Theory and Evidence, [in:] Handbook of Economic Growth, Aghion, P., Durlauf, S. (red.), Elsevier, p. 865–934. DOI: https://doi.org/10.1016/S1574-0684(05)01012-9

Levine, R., Zervos, S. (1998). Stock Markets, Banks, and Economic Growth. American Economic Review, vol. 88(3), p. 537–558. DOI: https://doi.org/10.1596/1813-9450-1690

Lucas, R.E. (1988). On the Mechanics of Economic Development. Journal of Monetary Economics, vol. 22(1), pp. 3–42. https://doi.org/10.1016/0304-3932(88)90168-7 DOI: https://doi.org/10.1016/0304-3932(88)90168-7

Mankiw, N., Taylor, M. (2016). Makroekonomia. PWE, Warszawa, ISBN: 978-83-208-2208-3.

Matysek-Jędrych, A. (2007). System finansowy – definicja i funkcje, Bank i kredyt, ISSN: 01375520.

Meadows, D., Meadows, D., Randers, J., Behrens, W.W. (1972). The Limits to Growth. Universe Books. https://doi.org/10.1515/9780295741406-018

Meredyk, K. (2003). Teoria wzrostu gospodarczego. Wydawnictwo Uniwersytetu w Białymstoku, ISBN: 83-89031-63-9.

Mishkin, F.S. (2013). Ekonomika pieniądza, bankowości i rynków finansowych. PWN.

NBP. (2020). Raport o stabilności systemu finansowego, Narodowy Bank Polski, https://nbp.pl/wp-content/uploads/2022/09/rsf122020.pdf

NBP. (2023). Raport o sytuacji sektora bankowego 2023, Narodowy Bank Polski.

North, D.C. (1990). Institutions, Institutional Change and Economic Performance. Cambridge University Press, Cambridge. https://doi.org/10.1017/CBO9780511808678

OECD (2022). Measuring Well Being and Progress: Beyond GDP 2022, OECD Publishing, https://www.oecd.org/en/topics/policy-issues/well-being-and-beyond-gdp.html

Olszewska, G. (2008). Egzogeniczne i endogeniczne modele wzrostu gospodarczego a transformacja gospodarcza, [in:] Mechanizmy i źródła wzrostu gospodarczego, Bednarczyk, J.L., Bukowski, S.I., Przybylska-Kapuścińska, W. (red.), CeDeWu, p. 119–136, ISBN: 978-83-7556-038-1.

Pagano, M. (1993). Financial Markets and Growth: An Overview. European Economic Review, vol. 37(23), p. 613–622, https://doi.org/10.1016/0014-2921(93)90051-B DOI: https://doi.org/10.1016/0014-2921(93)90051-B

Patterson, R. (2015). Kompendium terminów z zakresu bankowości po polsku i angielsku. Ministerstwo Finansów, Warszawa.

Reinhart, C.M., Rogoff, K.S. (2009). This Time Is Different: Eight Centuries of Financial Folly, Princeton University Press, Princeton. https://doi.org/10.1515/9781400831722 DOI: https://doi.org/10.1515/9781400831722

Romer, P.M. (1990). Endogenous Technological Change. Journal of Political Economy, vol. 98(5), p. S71–S102. https://doi.org/10.1086/261725 DOI: https://doi.org/10.1086/261725

Samuelson, P.A., Nordhaus, W.D. (2010). Economics. McGrawHill, New York, ISBN: 0073511293.

Saunders, A., Allen, L. (2010). Credit Risk Management in and Out of the Financial Crisis, Wiley. https://doi.org/10.1002/9781118267981 DOI: https://doi.org/10.1002/9781118267981

Shiller, R.J. (2015). Irrational Exuberance, 3rd ed., Princeton University Press, Princeton. https://doi.org/10.2307/j.ctt1287kz5 DOI: https://doi.org/10.1515/9781400865536

Smith, A. (1776). An Inquiry into the Nature and Causes of the Wealth of Nations. W. Strahan and T. Cadell, London. DOI: https://doi.org/10.1093/oseo/instance.00043218

Solow, R.M. (1956). A Contribution to the Theory of Economic Growth. Quarterly Journal of Economics, vol. 70(1), p. 65–94. https://doi.org/10.2307/1884513 DOI: https://doi.org/10.2307/1884513

Stiglitz, J.E., Sen, A., Fitoussi, J.-P. (2009). Report by the Commission on the Measurement of Economic Performance and Social Progress. https://ec.europa.eu/eurostat/documents/8131721/8131772/Stiglitz-Sen-Fitoussi-Commission-report.pdf

Sułkowska. W. (2014). System ubezpieczeń społecznych, Wydawnictwo Uniwersytetu Ekonomicznego w Krakowie, Kraków, ISBN: 978-83-7252-674-8.

Sławiński, A. (2010). Rynki finansowe. PWE, Warszawa.

World Bank, (2023). World Development Indicators 2023, World Bank. https://databank.worldbank.org/source/world-development-indicators

Worthington, S., Welch, P. (2011). Banking without the banks. International Journal of Bank Marketing, 29(2), p. 190–201. https://doi.org/10.1108/02652321111107657 DOI: https://doi.org/10.1108/02652321111107657