FD_mechanisms.xlsx

The data consists of 25 EU countries over the period 1995-2017. The analysis considers the effect of the financial development on economic growth proxied by two sectors; the bank and stock market. For this reason principal component (PCA) analysis is employed based on widely used financial indicators to produce two aggregate indices, namely financial banking sector development and financial stock market development . Three indicators are used as proxies for the banking sector (bank deposits, liquid liabilities and credit supply to private sector) and two for the market sector (market capitalisation and total value traded). The description of data is presented below:<i><b>ggdp:</b></i> The annual percentage GDP growth rate (%)bdep: Total assets held by deposits money banks as shared to GDP (% of GDP). <i><b>lly:</b></i> Liquid liabilities to GDP (% of GDP), <i><b>privy:</b></i> Credit to private sector as percentage to GDP(% of GDP)<i><b>mcap:</b></i> Stock market capitalization as shared to GDP (% of GDP). <i><b>tvt:</b></i> Stock market total value of all traded shares as a percentage of GDP(% of GDP). <i><b>Inflation:</b></i> as measured by the consumer price index is used as a proxy for ?nancial stability (%).<i><b>openness: </b></i>Trade openness to GDP (% of GDP), which is the sum of exports plus imports andmeasures the economic policies that either restrict or invite trade between countries.<i><b>hhd:</b></i>Total stock of debt liabilities issued by households, including all debt instruments,as a share of GDP (% of GDP).<i><b>pvd: </b></i>Total stock of debt liabilities issued by households and non?nancial corporations, including all debt instruments, as a share of GDP (%).<i><b>unem:</b></i> Unemployment refers to the share of the labor force that is without work but availablefor and seeking employment (% of total labor force).<i><b>npl:</b></i> Bank nonperforming loans to total gross loans (%). <i><b>sav:</b></i> Gross domestic savings to GDP (% of GDP). Gross domestic savings are calculated as GDP less ?nal consumption expenditure (total consumption).<b><i>gfcf: </i></b>Gross ?xed capital formation to GDP (% of GDP).