BANKING AND REAL SECTORS OF UKRAINE’S ECONOMY: ASSESSMENT OF RELATIONSHIPS AND THE DEVELOPMENT DETERMINANT
Keywords:
economic growth, banks, real sector of Ukraine’s economy, Granger test, demand-following hypothesis, supply-leading hypothesisAbstract
Causal relationships between level of economic growth and development of banking system of Ukraine over the period 1995–2016 were estimated. It is substantiated the feasibility of using the index of industrial production to assess growth of the economy and dynamics of the net assets of the banking system to assess its development. Testing was carried out using the Granger method with a time lag of 1 month, 2 months, 3 months, 6 months and 1 year. Results of empirical studies are appeared to be sensitive to stage of the economic cycle: during periods of instability, economic dynamics determine development of the banking system, whereas in phase of recovery and growth of banks' assets, economic dynamics positively affects index of industrial production. Thus, the demand-following hypothesis is confirmed over the period 2006–2016 and October 2008 – January 2017; the supply-leading hypothesis has been proven over the period January 2006 – September 2008. These results are explained, firstly, by significant number of banking, financial and economic crises that have taken place in Ukraine since independence, and, secondly, by institutional factors of economic growth. Given the above, level of economic growth in Ukraine today remains unstable and causes negative dynamics of the banking sector.
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