Financial Deregulation and Financial Development, and Subsequent Impact on Economic Growth in the Czech Republic, Hungary and Poland

Abstract

Results support Arestis’s theory, that low real interest rates do not prevent economic growth (though he related it to the regulation debate). Here in the deregulation environment, it also stands. Results also support Shaw’s assertion that financial liberalisation increases the monetary sector. Stiglitz’s theory, that government intervention leads to improved quality of loans, is contradicted as the reduction of state involvement led to bad loans falling. Support is given to Everett and Kelly’s view that financial liberalisation supports growth. Finally King and Levine studies are supported -- banking sector development leads to faster growth, and also Barth’s view that state involvement leads to poorly developed banks.