Journal of Applied Finance & Banking

Impact of Bank Credits on Economic Growth and Inflation

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  • Abstract

    Economic functioning will be realized non-problematically to an extent that countries can achieve financial deepening. Financial deepening will provide an important role for particularly transferring funds that are created by banks to real sector. Whether domestic credits created by banking sector have any effect on macro-economic variables such as inflation and economic growth for 10 chosen European countries was tested via panel data analysis. Annual data for 2006-2012 were used. As a result of panel data analysis, it was proved that domestic credits created by banking sector for 10 European countries did not affect inflation but did affect economic growth.