Financial development and growth in Hungary

Abstract

This study investigated the relationship between financial development and economic growth in Hungary using a case study approach. Majority of previous studies on the same or similar topic have so far used regression and or econometric methodologies to examine the nature of the relationship between financial development and economic growth. Not a single study the author is aware of used a case study approach to discuss the relationship between the two variables. It is against this background that the author decided to use the case study approach that allows the author to really deepen an understanding of the relationship between the two variables in Hungary. Apart from being narrowly focused on regression or econometric approaches, previous studies on the same or similar topic in Hungary excluded a broad range of financial development variables. The current study departs from these previous studies as it used a case study approach and taken into account a broad range of financial development variables. From the trend analysis done in section 3, it appears that the relationship between financial development and growth in Hungary during the period under study is not clear. A definite and clear cut conclusion could not be reached about the relationship between the two variables in Hungary hence the use of econometric data analysis approaches in conjuction with the case study approach is recommended.