Importance of Financial Sectors for Growth in Accession Countries

Over the last decade the role of financial sector development in economic growth has become a major topic in empirical research. Most cross-section-oriented studies (for example Rousseau and Wachtel, 2000; Levine et al., 2000; Singh et al. 2000; Demirguec-Kunt and Levine, 1999) base their analyses on broad samples of industrial and developing countries. Most of them find a positive interrelation between financial development and economic growth. But as Ahmed (1998) argues with respect to bank development: quot;there are reasons to expect that [...] the effect of bank development on growth may not be the same in magnitude in developing countries and industrial economies [...] . Thus due to country aggregation we cannot answer interesting questions such as: how do the effects of banking development in a country such as the United States differ from those in Zimbabwe, say?quot