Kredito įstaigų sektoriaus vystymasis Lietuvos ūkyje:poveikis ekonomikos augimui ; Credit institutions sector's development in the Lithuanian economy: impact on economic growth

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Gitana DUDZEVIČIŪTö CREDIT INSTITUTIONS SECTOR’S DEVELOPMENT IN THE LITHUANIAN ECONOMY: IMPACT ON ECONOMIC GROWTH Summary of Doctoral Dissertation Social Sciences, Economics (04S) 1281 Vilnius Technika 2006 VILNIUS GEDIMINAS TECHNICAL UNIVERSITY Gitana DUDZEVIČIŪTö CREDIT INSTITUTIONS SECTOR’S DEVELOPMENT IN THE LITHUANIAN ECONOMY: IMPACT ON ECONOMIC GROWTH Summary of Doctoral Dissertation Social Sciences, Economics (04S) Vilnius Technika 2006 Doctoral dissertation was prepared at Vilnius Gediminas Technical University in 2001–2005. The dissertation is defended as an external work.

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• Bank
• Economics

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• Publié par: vilnius_gediminas_technical_university
• Publié le: 01 janvier 2006
• Nombre de lectures: 38

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        Gitana DUDZEVI Č I Ū T ö           CREDIT INSTITUTIONS SECTOR’S DEVELOPMENT IN THE LITHUANIAN ECONOMY: IMPACT ON ECONOMIC GROWTH         Summary of Doctoral Dissertation Social Sciences, Economics (04S)             Vilnius Technika 2006

 

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VILNIUS GEDIMINAS TECHNICAL UNIVERSITY                   Gitana DUDZEVI Č I Ū T ö           CREDIT INSTITUTIONS SECTOR’S DEVELOPMENT IN THE LITHUANIAN ECONOMY: IMPACT ON ECONOMIC GROWTH         Summary of Doctoral Dissertation Social Sciences, Economics (04S)               Vilnius Technika 2006

 

 

Doctoral dissertation was prepared at Vilnius Gediminas Technical University in 2001–2005. The dissertation is defended as an external work.   Scientific Supervisor Prof Dr Habil Aleksandras Vytautas RUTKAUSKAS  (Vilnius Gediminas Technical University, Social Sciences, Economics – 04S)   The Dissertation is being defended at the Council of Scientific Field of Economics at Vilnius Gediminas Technical University: Chairman Prof Dr Habil Romualdas GINEVI Č IUS (Vilnius Gediminas Technical University, Social Sciences, Economics – 04S)   Members: Prof Dr Habil Borisas MELNIKAS  (Vilnius Gediminas Technical University, Social Sciences, Economics – 04S) Assoc Prof Dr Manuela TVARONAVI Č IEN ö  (Vilnius Gediminas Technical University, Social Sciences, Economics –04S) Prof Dr Habil Leonas SIMANAUSKAS  (Vilnius University, Social Sciences, Economics – 04S) Prof Dr Habil Rimvydas SIMUTIS  (Kaunas University of Technology, Technological Sciences, Informatics Engineering – 07T)   Opponents: Prof Dr Habil Jonas MACKEVI Č IUS (Vilnius University, Social Sciences, Economics – 04S) Dr Rima TAMOŠI Ū NIEN ö   (Vilnius Gediminas Technical University, Social Sciences, Economics – 04S)   The dissertation will be defended at the public meeting of the Council of Scientific Field of Economics in the Senate Hall of Vilnius Gediminas Technical University at 10 a. m. on 20 June 2006. Address: Saul ÷ tekio al. 11, LT-10223 Vilnius-40, Lithuania Tel.: [phone]; fax [phone]; e-mail [e-mail]   The summary of the doctoral dissertation was   distributed on 19 May 2006. A copy of the doctoral dissertation is available for review at the Library of Vilnius Gediminas Technical University (Saul ÷ tekio al. 14, Vilnius, Lithuania) © Gitana Dudzevi č i ū t ÷ , 2006

 

 

VILNIAUS GEDIMINO TECHNIKOS UNIVERSITETAS                   Gitana DUDZEVI Č I Ū T ö         KREDITO Į STAIG Ų SEKTORIAUS VYSTYMASIS LIETUVOS Ū KYJE: POVEIKIS EKONOMIKOS AUGIMUI           Daktaro disertacijos santrauka Socialiniai mokslai, ekonomika (04S)                 Vilnius Technika 2006  

 

 

Disertacija   rengta   2001–2005   metais   Vilniaus   Gedimino   technikos universitete. Disertacija ginama eksternu.   Mokslinis konsultantas prof. habil. dr. Aleksandras Vytautas RUTKAUSKAS (Vilniaus Gedimino technikos universitetas, socialiniai mokslai, ekonomika – 04S).   Disertacija ginama Vilniaus Gedimino technikos universiteto Ekonomikos mokslo krypties taryboje: Pirmininkas prof. habil. dr. Romualdas GINEVI Č IUS (Vilniaus Gedimino technikos universitetas, socialiniai mokslai, ekonomika – 04S). Nariai: prof. habil. dr. Borisas MELNIKAS  (Vilniaus Gedimino technikos universitetas, socialiniai mokslai, ekonomika – 04S), doc. dr. Manuela TVARONAVI Č IEN ö  (Vilniaus Gedimino technikos universitetas, socialiniai mokslai, ekonomika – 04S), prof. habil. dr. Leonas SIMANAUSKAS (Vilniaus universitetas, socialiniai mokslai, ekonomika – 04S), prof. habil. dr. Rimvydas SIMUTIS (Kauno technologijos universitetas, technologijos mokslai, informatikos ininerija  – 70T).  Oponentai: prof. habil. dr. Jonas MACKEVI Č IUS (Vilniaus universitetas, socialiniai mokslai, ekonomika – 04S), dr. Rima TAMOŠI Ū NIEN ö   (Vilniaus Gedimino technikos universitetas, socialiniai mokslai, ekonomika – 04S).   Disertacija bus ginama viešame Ekonomikos mokslo krypties tarybos pos ÷ dyje 2006 m. birelio 20 d. 10 val. Vilniaus Gedimino technikos universiteto senato pos ÷ di ų sal ÷ je. Adresas: Saul ÷ tekio al. 11, LT-10223 Vilnius-40, Lietuva. Tel.: [phone]; faksas [phone]; el. paštas [e-mail]   Disertacijos santrauka išsiuntin ÷ ta 2006 m. gegu ÷ s 19 d. Disertacij ą  galima peri ū r ÷ ti Vilniaus Gedimino technikos universiteto bibliotekoje (Saul ÷ tekio al. 14, Vilnius, Lietuva) VGTU leidyklos „Technika“ 1281 mokslo literat ū ros knyga   © Gitana Dudzevi č i ū t ÷ , 2006

 

 

 The relevance of the dissertation    Studying the development of credit institutions in the economy is relevant as there is a strong relationship between the activity of the financial institutions and the economic growth as well as the economic stability. The changes in the European financial services sector are related to the processes of technological innovations, globalisation and consolidation. Entry of business into the Internet environment, intensifying competition, profit seeking of the financial institutions raises new requirements for the financial system’s development, including the activity of the credit institutions. These processes have a direct influence to the Lithuanian credit institutions’ development. Judging by the experience of the old-timers of the European Union, the number of the credit institutions in the Lithuanian market can further decline and inefficient activity of one of them can cause a systematic risk in the future. As the Lithuanian banking sector is dominated by foreign capital, the strategic changes are visible in the activity of the credit institutions. The banks concentrate their activity in the larger towns, close down unprofitable branches; establish business centres, pay more attention to the services’ quality trying to hold a larger share of the market. This way, the inhabitants of provinces and enterprises working out of the large towns remain without financial services. Analysis of the credit institutions’ development stands at the core of economic growth topic. Issues tackled within the research field could be attributed to three broadly taken topics. The first one is related to theoretical survey of the possible effects of financial intermediation sector on economic growth, which includes a theoretical analysis of the role of financial intermediaries in the economy and the empirical study of their effects on economic growth. The second field is associated with evaluation of the credit institutions’ tendencies in the Lithuanian economy, comparative analysis of the Lithuanian credit institutions development in the context of the European Union. The third one is to be concentrated on the elaboration of the most influential factors of the banking sector, impacting the process of economic development, quantitative analysis of the foreign capital impact on the Lithuanian credit market development and presentation of economic interpretation of traced relationships.    Research objectives, questions and rationales    The area of the research is financial institutions and markets. The research objective is related with the development of credit institutions in the Lithuanian economy and their impact on the economic growth. The Lithuanian financial institutions’ sector is examined as part of the European Union financial system.

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In order to implement the formulated objective, a set of the following research questions are to be tackled.  Theoretical and empirical approaches, related to financial intermediation sector’s development and economic growth are to be analysed. Detailed theoretical argumentations on this relationship are to be presented. The ratios’ groups reflecting the credit institutions’ development in the economy are to be elaborated. Their pluses and minuses are defined in order to determine the appropriate ratios for further analysis and assessment.  The attitude that the supervisory institutions’ activity influences the stability of the financial system is defended. This research question is to be elaborated having the aim to point out the importance of the credit institutions’ regulation. The main reasons determined the changes in the international financial system are to be analysed.  The tendencies of the Lithuanian banking sector in the economy are to   be examined and the growth ratios analysis of the credit unions is to be performed. The aim is to assess the volume of the credit institutions’ activity in the economy and to define the trends of their development.  SWOT analysis is to be applied in order to settle the strategic development’s directions for the Lithuanian credit unions and answer the question, whether credit unions are able to satisfy the needs of the clients, compared to banks, and take the niches in the market?  Taking into account that the tendencies of the European Union financial system’s have impact on the Lithuanian credit institutions development, the key features of the European Union credit institutions sectors’ are to be analysed.  Referring to the quantitative analysis, foreign capital impact on the Lithuanian credit market development is evaluated and statistically tested.  On the basis of comprehensive theoretical analysis of basic factors, which make influence on the economic growth, a set of banking ratios has been chosen and based on statistical regression models the most influential factors have been highlighted, their impact on economic growth evaluated and economic interpretation of traced relationships was presented.  The application of the multi-criteria evaluation methods. The aim is to get an unbiased view of the credit institutions sector’s state in particular countries of the European Union.    

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Research methods   The research is based on critical review of scientific literature, inductive and deductive research approaches, statistical methods, and case studies as well as comparative analysis and modelling.   Novelty and practical value       The study is new due to several objective and subjective reasons. First of all, the European common financial system is in process of development and Lithuania, like other new member states of the EU, is in the convergence process with the EU old-timers. For Lithuania and other new member states of the EU, the changes ongoing in the euro area’s financial sectors indicate that these countries need to catch up with a moving target. Financial sectors in Lithuania and other new member states will become further integrated with the euro area. Secondly, the credit institutions’ development and their impact on economic growth is analysed by questioning and verifying the statements provided by various scholars as well as the economic theory. In order to achieve the objectives, the following interrelationships are elaborated: between credit institutions’ groups (banking sector and credit unions); between credit institutions and supervisor’s institution; between the credit institutions’ development and the economic growth as well as the social-economic environment; between local and global tendencies; between the current situation and future trends. The results of the researches can be used successfully for the formulation of the economic policy and determining particular factors, impacting on more effective economic growth. Input of the author is especially significant in generating the research approach, research framework (Fig 1) and the economic interpretation of the results.    The structure and summary findings of the dissertation   The study is composed of introduction, four parts, conclusions, references and appendixes. The relevance, object, aim, novelty and methodology of the dissertation as well as the practical value and input of author are presented in the introduction . The first part gives an overview of the existing studies and theories on the subject. The results of the empirical researches on financial intermediation sector’s role in the economy are summarised.  

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Detailed theoretical argumentations and practical evidences on financial sector’s development and economic growth are presented. The studies on financial intermediation are focused on two issues: 1) the theoretical analysis of the functions of financial intermediaries in the economy, and 2) the empirical analysis of the effects of financial intermediation on economic activity and growth. As the Lithuanian banking sector is largely foreign-owned, the theories of internationalisation are examined by seeking to explain why firms start investing abroad at a certain stage of development, how they do this and what are the development implications of such activities. The second part   presents the key ratios by describing credit institutions’ development and penetration in the economy. The tendencies of the Lithuanian banking sector in GDP are examined and the growth ratios analysis of the credit unions is performed. The aim is to assess the breadth and depth of the credit institutions in the Lithuanian economy, to define the development’s trends and answer the question whether the credit unions are able to satisfy the needs of the clients and to take niches in the market. For this purpose SWOT analysis is applied. The attitude that the supervisory institutions’ activity influences the stability of the financial system is defended. The third part examines the credit institutions’ development in the EU new member states and old-timers. The comparative analysis is applied in order to assess the Lithuanian credit institutions’ position in the context of the EU. The credit institutions’ sector development is considered an important feature in the new member states convergence process with the old-timers. It is important for an increase in size, depth and efficiency of the credit institutions’ sector, which is closely linked with the economic growth. The financial development goes in line with the economic development, and the financial sector is likely to be significantly larger in the future than it is today. The development of the credit unions in some of the EU new member states and old-timers is analysed in this part. Taking into account the results of SWOT analysis performed in the second part of the dissertation, and the tendencies of the credit unions’ in the EU, the strategic trends of the Lithuanian credit unions are defined as well as the model of development is proposed. The fourth part   deals with the quantitative analysis of the foreign capital and other influential factors’ impact on the Lithuanian credit market development. The analysis indicated the best combination of variables, describing the variation in the Lithuanian credit market. On the basis of the comprehensive theoretical analysis of basic factors, which make influence on economic growth, a set of banking ratios has been chosen (Table 1) and based on statistical regression models the most influential factors

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have been highlighted (Table 2), their impact on economic growth is evaluated and economic interpretation of traced relationships is presented.   Table 1. Indicators chosen for the analysis   Y X 1  X 2  X 3  X 4  X 5  X 6   Gross Banking Banking Share of D/E Loan Deposit domestic loans, LTL deposits, foreign (debt/equity) interest interest product million LTL ownership ratio of the rate, % rate, % (GDP), million in total companies, LTL banks’ % million capital, %   Table 2. Correlation coefficients and their significance   YX 1  YX 2  YX 3  YX 4  YX 5  YX 6     r (correlation 0.9519 0.9794 0.8766 0.9713 -0.8993 -0.8791 coefficient)   st 7.6101 11.8928 4.4626 10.0028 5.0356 4.5182 t t lent   2.4469 2.4469 2.4469 2.4469 2.4469 2.4469   The multicollinearity of the variables was tested and the best combination of the ratios was defined. The results of the research showed that approx. 98 % of the variation in GDP (Y) can be explained by using X 2 , X 3 , X 4 , X 6 :   Y 17416.61 0.74 X 2 114.62 X 3 798.24 X 4 1064.64 X 6 .     In this part, the application of multi-criteria evaluation methods gives an unbiased view of the credit institutions’ sector state in particular countries of the EU (Fig 2).

160 140 120 100 80 60 40 20 0 Lithuania EU new member EU old-timers states   Fig 2. Multi-criteria evaluation of the banking sector                

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