![]() In the paper we analyze the main aspects of the financial deepening in ten ETE in the period - using vector error correction model (VECM). On the other hand especially some country-specific institutional characteristics and different policies may significantly distort positive incentives of the financial deepening. It is generally expected there is a positive effect of financial development on economic growth. One of the most discussed areas related to the overall effects of the financial deepening is a bidirectional relationship between financial development and economic growth. ![]() As the underdeveloped financial markets obviously constrain domestic capital mobilization, the international financial integration is considered to be very useful vehicle in fostering financial sector advancement. International capital inflows (especially debt and portfolio capital flows) stimulate financial deepening through higher demand for financial services. Perspective of the fast and sustainable economic growth at the end of the 99s increased an attractiveness of the European transition economies (ETE) for the foreign investors that resulted in increased foreign capital inflows to ETE. Together with financial liberalization and international financial integration economists focus their attention to the financial deepening especially due to its potential effects on the real economy. 9, posted Sep : UTCįinancial Deepening and Economic Growth in the European Transition Economies Rajmund Mirdala Faculty of Economics, Technical University of Kosice, Slovakia Abstract: Various effects of the financial deepening came to the centre of academics as well as policy-makers discussions during last four decades especially in relation to the financial sector development. Munich Personal RePEc Archive Financial Deepening and Economic Growth in the European Transition Economies Mirdala, Rajmund Faculty of Economics, Technical University in Kosice, Slovak republic June Online at MPRA Paper No.
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