The effect of financial development on the economic growth: The case of Belarus

The purpose of this thesis is to investigate the effects of financial intermediation on Belarusian economic growth. Data from the World Bank and Belarusian government statistics were used to create a time series from 2003 to 2018. To study interrelationships between variables in the VAR system, the Vector Auto regression (VAR) technique and Innovation accounting (variance decomposition) analysis are used, which varies from the conventional approach or technique in general. Financial development is shown to be the second most important determinant (after labor force) in driving economic expansion in Belarus. Financial intermediation has a major impact on economic growth in Belarus, according to the study. A two-way causation exists between financial development and economic growth. This type of research is rare in Belarus, but it represents an important development in the literature on the finance-growth link.