Correlation Analysis Between Structure Financial System and Economic Growth in Romania

Abstract

Essential component of a country's economy, the financial system includes all financial relations between different actors in the process of formation, distribution and use of financial resources. The major objectives of an economy such as stability, economic growth and sustainable development are closely linked to the ability of financial systems to undertake such objectives. However, the main objective of the financial system in an economy is that of ensuring long-term economic growth through efficient financing of the economy. Financing economy refers to how the procurement and allocation of resources, both at micro and macro level, which can be divided into three categories:, Equity Finance (self-financing); Financing the capital market (direct funding); Debt financing (indirect financing). Elements of the financial system in our country are: financial markets (money market and capital market), financial intermediaries (banks, insurance companies, and investment companies), and financial infrastructure (payment systems and clearing houses). In general, emerging markets are characterized by financial systems based mainly on banks, while in developed countries for financial systems is based on the capital market. This may explain why emerging markets return after a period of crisis, it is cumbersome and lengthy. We believe that there should be a balance between the two components of the financial system so that recovery of losses incurred in a period of crisis, to be made in a short time. In this paper we use several variables to measure the development of the two components of the financial system and the banking capital market, such as market capitalization, leading interest rates, average annual growth rate in money and quasi-money, bank capital to assets ratio, domestic credit provided by banking sector. We analyzed, using SPSSS, the main indicators characterizing the relationship between financial sector development in our country, showing that there is a significant relationship between capitalization and loan rate, M2, the rate of bank assets and domestic credit from the banking sector.

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