Cross-Country Analysis Influence of Banking Credit on Economic Growth

Introduction. The aim of the work is to econometrically study the impact of bank lending on economic growth rates on the basis of cross-country comparisons based on average data for 2005–2015. Theoretical analysis. In the article it is proposed to use the Schumpeterian model of convergence between countries with financial constraints, which was improved in [1] to analyze the influence of bank lending on economic growth. Empirical analysis. Based on the improved Schumpeterian model of convergence between countries with financial constraints, an econometric modeling of the impact of bank credit on economic growth was conducted for three groups of countries with a high, medium and low value of the human development index. Results. Empirical cross-country studies have confirmed the ambiguous impact of bank lending on economic growth in countries with different levels of socio-economic and financial development. In countries with high HDI values, the direct channel of the impact of bank lending on economic growth has been insignificant, and the convergence of growth rates has been achieved mainly through the process of technology transfer and increased production efficiency. In countries with an average HDI, lending has a direct positive effect on growth rates, but does not increase the likelihood of convergence through a more developed financial system. In countries with a low level of development, the only significant factor is investment in fixed assets. The indirectly obtained results show that only an investment credit for the development of the real sector of the economy, and not all credit in general has a positive impact on economic growth.