Identification of Financial Sector Optimal Depth and Structure from the Perspective of Economic Growth, Macroeconomic and Financial Stability

This paper attempts to estimate financial sector development targets which, other things being equal, provide for the best possible GDP performance while ensuring its growth sustainability along with price and financial stability. To address this task, the hypothesis of nonlinear relationship between GDP dynamics, its volatility, inflation, the frequency of financial crises, on the one hand and the development of key financial sector segments was tested. The study used a standard technique of panel data regression analysis, on the other hand employed in studies examining similar issues and a sample of 63 emerging and advanced economies covering 1980 – 2014.