Financial Development, Technology, Growth and Performance: Evidence from the Accession to the EU

26 Pages Posted: 22 Apr 2012 Last revised: 12 May 2012

See all articles by Andrey Zagorchev

Andrey Zagorchev

Rhodes College - Department of Business

Geraldo M. Vasconcellos

Lehigh University - College of Business

Youngsoo Bae

University of Seoul

Date Written: May 1, 2011

Abstract

During the past two decades, many countries have embarked on a path of developing their financial markets, strengthening their technological base and stabilizing their economies. This paper finds that financial development and investment in information and communications technology (ICT) have significant positive impacts on GDP during macroeconomic structural reforms. We investigate eight Central and Eastern European countries that recently joined the EU. To secure macroeconomic stabilization, the countries have gone through privatization, harmonization and adjustments of the economies based on convergence criteria. Since some instruments are chosen based on the decision of the countries to satisfy the EU economic requirements, this unique experience along with a GMM methodology mitigates potential endogeneity problems. We estimate systems of simultaneous equations by GMM methods for GDP per capita, financial development, and investment in telecommunications technology (TEL). We also find that financial development positively impacts TEL and that TEL weakly contributes to financial development.

Keywords: Financial Development, Technology, GDP, Economic Growth, Economic

JEL Classification: C30, F36, F40, G15, K00, O33

Suggested Citation

Zagorchev, Andrey and Vasconcellos, Geraldo M. and Bae, Youngsoo, Financial Development, Technology, Growth and Performance: Evidence from the Accession to the EU (May 1, 2011). Journal of International Financial Markets, Institutions and Money, Vol. 21, 2011. Available at SSRN: https://ssrn.com/abstract=2043567

Andrey Zagorchev (Contact Author)

Rhodes College - Department of Business ( email )

United States

Geraldo M. Vasconcellos

Lehigh University - College of Business ( email )

Bethlehem, PA 18015
United States
610-758-5347 (Phone)
610-758-4499 (Fax)

Youngsoo Bae

University of Seoul ( email )

Seoul
Korea, Republic of (South Korea)

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