The inter-linkages between financial and economic development in the European Union Countries

Figures & data

Figure 1. The steps of the research.

Table 1. Descriptive statistics of financial and economic development.

	Real GDP per capita (Euro)				Financial activities as a percentage of GDP
The groups of countries	Average over 1998–2016	MIN	MAX	STD DEV.	Average over 1998–2016	MIN	MAX	STD DEV.
Very high real GDP per capita	76400	61700	84400	5943	23.2	18.9	26.6	1.9
Luxembourg	76400	61700	84400	5943	23.2	18.9	26.6	1.9
High real GDP per capita	35906	27500	51400	4707	4.8	2.1	10.2	1.7
Denmark	43758	39800	46200	1751	4.7	3.8	5.4	0.6
Sweden	37726	30900	42500	3292	3.7	3.1	4.2	0.3
Ireland	37621	27500	51400	5570	7.7	5.6	10.2	1.3
Netherlands	36847	32300	39400	2025	6.3	4.9	7.7	0.8
Austria	34111	29700	36200	2108	4.2	3.8	4.8	0.3
Finland	33521	27800	37300	2531	2.5	2.1	3.0	0.2
Belgium	32432	28400	34400	1806	5.2	4.3	5.7	0.4
Germany	31232	27600	34500	2206	4.2	3.5	4.9	0.4
Middle real GDP per capita	25015	16500	31800	4359	5.1	3.2	10.7	1.7
France	30374	27400	31800	1201	3.6	3.2	4.1	0.3
United Kingdom	29042	25000	31400	1826	6.3	4.6	8.3	1.1
Italy	26989	25400	28700	1085	4.7	4.2	5.2	0.3
Spain	22668	19600	24500	1263	4.2	3.4	5.3	0.5
Cyprus	21932	19000	24700	1597	7.6	5.7	10.7	1.7
Greece	19084	16500	22700	2164	4.1	3.5	4.6	0.3
Low real GDP per capita	14083	7000	20100	3073	4.3	1.9	7.3	1.2
Slovenia	16542	12800	19200	1860	4.0	3.3	4.7	0.4
Portugal	16479	15300	17200	477	5.6	4.3	7.1	0.7
Malta	15888	13800	20100	1854	5.6	3.1	7.3	1.4
Czech Republic	13768	10500	16400	1931	3.5	2.5	4.3	0.6
Slovakia	10984	7700	14500	2403	3.3	1.9	4.0	0.6
Estonia	10837	7000	13500	2258	3.6	2.7	4.8	0.4
Very low real GDP per capita	7825	2800	12000	2466	3.7	1.7	7.9	1.3
Croatia	10100	8000	11500	927	5.0	3.2	6.2	0.8
Hungary	9521	7300	11200	1147	3.6	3.0	4.3	0.4
Lithuania	8474	5000	12000	2345	2.1	1.7	3.1	0.4
Poland	8426	5900	11200	1739	3.6	3.3	4.2	0.2
Latvia	8200	4700	11000	2106	3.8	3.0	5.0	0.6
Romania	5568	3600	7600	1319	2.9	1.8	4.0	0.8
Bulgaria	4484	2800	6000	1049	4.8	1.8	7.9	1.8

Source: authors’ calculations based on Eurostat data (Eurostat 2016a, b).

Table 2. Augmented Dickey Fuller stationarity test.

		First difference
Countries	Variables	Intercept	Intercept & Trend	None
Bulgaria	Economic development	−3.563913**	−3.664943	−1.360182
	Financial development	−5.876392***	−5.851923***	−5.603572***
Czech Republic	Economic development	−2.675188	−2.690719	−1.849361*
	Financial development	−3.865308***	−3.657512*	−3.982401***
Denmark	Economic development	−3.082140**	−3.052151*	−2.991906***
	Financial development	−4.536212***	−4.515132***	−4.132329***
Germany	Economic development	−4.678331***	−4.485932**	−3.374280***
	Financial development	−5.199355***	−4.988431***	−5.117966***
France	Economic development	−3.421190**	−3.445766*	−3.046272***
	Financial development	−5.207411***	−5.266241***	−5.250671***
Croatia	Economic development	−2.302176	−2.234478	−2.168090**
	Financial development	−1.410707	−6.401982***	−1.486176
Latvia	Economic development	−3.931471***	−4.008856**	−1.222104
	Financial development	−3.713091**	−3.641890*	−3.744344***
Luxembourg	Economic development	−3.877511***	−3.791062**	−3.152725***
	Financial development	−4.335634***	−4.031798**	−4.513857***
Austria	Economic development	−3.881276**	−4.553840**	−2.919487***
	Financial development	−7.308551***	−7.292256***	−7.127822***
Finland	Economic development	−4.005814***	−4.526443**	−2.547441**
	Financial development	−4.186612***	−4.084725**	−4.208834***
Portugal	Economic development	−3.101872**	−2.874253	−3.113907***
	Financial development	−3.416090**	−3.964840**	−3.466975***
Slovakia	Economic development	−3.340097**	−3.212895**	−1.921974*
	Financial development	−3.893403***	−3.759910**	−3.910852***
United Kingdom	Economic development	−2.484241	−2.495117	−3.957247**
	Financial development	−4.866936***	−5.097922***	−4.881973***
Second difference
Bulgaria	Economic development	−5.273429***	−4.898200***	−5.466102***
	Financial development	−5.427712***	−5.195919***	−5.657616***
Czech Republic	Economic development	−4.290937***	−4.118964***	−4.466070***
	Financial development	−7.855937***	−8.072210***	−8.108086***
Croatia	Economic development	−4.570706***	−4.524317**	−4.760598***
	Financial development	−10.52228***	−10.13801***	−10.83855***
Latvia	Economic development	−4.916173***	−4.713912***	−5.117746***
	Financial development	−5.722130***	−5.497642***	−5.871067***
Portugal	Economic development	−4.462257***	−4.772685***	−4.647817***
	Financial development	−5.084558***	−4.865363***	−5.257254***
United Kingdom	Economic development	−4.545508***	−3.957247**	−4.687885***
	Financial development	−10.02670***	−9.920038***	−10.37227***

Note: ***p < 0.01, **p < 0.05, *p < 0.1.

Source: calculations based on Eviews v. 8.0.

Table 3. The results of Granger causality test.

Null hypothesis	Observations /Lags	F-statistic	Probability	Test results
Luxembourg
FD does not Granger cause of GDP	Obs.: 17	13.8257	0.0023	Rejected
GDP does not Granger cause of FD	Lags: 1	5.57576	0.0332	Rejected
Denmark
FD does not Granger cause of GDP	Obs.: 15	0.13399	0.9370	Accepted
GDP does not Granger cause of FD	Lags: 3	4.84400	0.0331	Rejected
Austria
FD does not Granger cause of GDP	Obs.: 11	2.60000	0.0000	Rejected
GDP does not Granger cause of FD	Lags: 4	0.14981	0.9468	Accepted
Finland
FD does not Granger cause of GDP	Obs.: 15	0.69157	0.5824	Accepted
GDP does not Granger cause of FD	Lags: 3	0.21218	0.8852	Accepted
Germany
FD does not Granger cause of GDP	Obs.: 15	0.14259	0.9316	Accepted
GDP does not Granger cause of FD	Lags: 3	0.06648	0.9762	Accepted
France
FD does not Granger cause of GDP	Obs.: 17	6.16800	0.0263	Rejected
GDP does not Granger cause of FD	Lags: 1	11.4670	0.0044	Rejected
United Kingdom
FD does not Granger cause of GDP	Obs.: 16	6.19989	0.0271	Rejected
GDP does not Granger cause of FD	Lags: 1	6.62496	0.0231	Rejected
Portugal
FD does not Granger cause of GDP	Obs.: 16	2.13357	0.1678	Accepted
GDP does not Granger cause of FD	Lags: 1	8.85768	0.0107	Rejected
Czech Republic
FD does not Granger cause of GDP	Obs.: 14	0.57887	0.6472	Accepted
GDP does not Granger cause of FD	Lags: 3	1.51777	0.2917	Accepted
Slovakia
FD does not Granger cause of GDP	Obs.: 15	0.24010	0.8660	Accepted
GDP does not Granger cause of FD	Lags: 3	0.95549	0.4590	Accepted
Croatia
FD does not Granger cause of GDP	Obs.: 12	0.26739	0.8466	Accepted
GDP does not Granger cause of FD	Lags: 3	0.60712	0.6385	Accepted
Latvia
FD does not Granger cause of GDP	Obs.: 16	1.34515	0.2670	Accepted
GDP does not Granger cause of FD	Lags:1	12.9425	0.0032	Rejected
Bulgaria
FD does not Granger cause of GDP	Obs.: 16	3.69841	0.0766	Accepted
GDP does not Granger cause of FD	Lags: 1	1.88746	0.1927	Accepted

Source: authors’ calculations based on E views v. 8.0.

Eurostat. (2016a). Retrieved from http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=nama_10_pc&lang=en.

 Google Scholar

Eurostat. (2016b). Retrieved from http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=nama_10_a10&lang=en.

 Google Scholar