Forecasting of the influence of financial institutions loan portfolio change for the economic sectors of the country

Daiva Jureviciene, Laura Pupelyteeeee

Research output: Contribution to journalArticle

Abstract

Purpose of the article is to predict the interrelationship between the change of financial institutions loan portfolio and activities of the main economic sectors in Lithuania. Coherence between financial intermediation and economic growth cause a great interest of economists during the late decade. Prevailed opinion that banking sector is the reflection of economic growth and expansion and that its role – to intermediate in the saving and investing needs, reallocating funds between economic activities, was replaced by sentiment that strong and stable banking sector could be not only the result of economic development, but also the cause of this growth. The purpose of the article is to accomplish forecast of the influence of financial institutions loan portfolio change to the main economic sectors in Lithuania for 2013-2017 period. Methodology/methods Analysis of variation of loan portfolio according economic sectors shows the tendencies of financing of various activities in the past. Regression - correlation analysis helps to identify the influence of loan portfolio changes and their impact for GDP and employment in separate economic sectors. The forecasting of different economic sectors was made using extrapolation methods (smoothing, trend line) and econometric method (one dimensional regression). Scientific aim: Economic situation in Lithuania forces to estimate decisions made by banking sector that influence not only individual countries but also the global economy. In this regard, there is a natural question of whether the process of underway stagnation should be judged as a timely economic development stage, or perhaps as the result of policies pursued by financial institutions? Prerequisites for the problem situation forces to overhaul loan portfolio managed by financial institutions, evaluate its change on the country's economy sectors, and to investigate these relationships forecasts. Findings: There is a strong link between financial sector development and economic growth. The results showed that the volume of loans has a very close interdependence with the GDP. Data obtained for loan portfolio forecasting for 2013-2017 showed that the growth of loans can be seen in all sectors except construction. Employment should grow only in public and retail sectors. Conclusions (limits, implications etc): The most relationship with GDP was established in retail and public sectors. Determining the correlation coefficients and regression equations between loans and employment the strongest relationship found in retail, industrial and construction sectors. The study encountered lack of data for 2012, since the information about the composition of the loan portfolio in different sectors since November 2011 is no longer provided to the Bank of Lithuania.
Original languageEnglish
Pages (from-to)1-16
JournalCreative and knowledge society: international scientific journal
Volume3
Issue number1
Publication statusPublished - 2013

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Economic sectors
Financial institutions
Loan portfolio
Lithuania
Economic growth
Retail sector
Banking sector
Loans
Construction sector
Economic development
Public sector
Economics
Interdependence
Financial sector development
Financial economics
Sentiment
Correlation coefficient
Econometric methods
Financial intermediation
Economists

Keywords

  • Financial institutions loan portfolio
  • Economical sectors
  • Macroeconomic indicators and economic growth

Cite this

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title = "Forecasting of the influence of financial institutions loan portfolio change for the economic sectors of the country",
abstract = "Purpose of the article is to predict the interrelationship between the change of financial institutions loan portfolio and activities of the main economic sectors in Lithuania. Coherence between financial intermediation and economic growth cause a great interest of economists during the late decade. Prevailed opinion that banking sector is the reflection of economic growth and expansion and that its role – to intermediate in the saving and investing needs, reallocating funds between economic activities, was replaced by sentiment that strong and stable banking sector could be not only the result of economic development, but also the cause of this growth. The purpose of the article is to accomplish forecast of the influence of financial institutions loan portfolio change to the main economic sectors in Lithuania for 2013-2017 period. Methodology/methods Analysis of variation of loan portfolio according economic sectors shows the tendencies of financing of various activities in the past. Regression - correlation analysis helps to identify the influence of loan portfolio changes and their impact for GDP and employment in separate economic sectors. The forecasting of different economic sectors was made using extrapolation methods (smoothing, trend line) and econometric method (one dimensional regression). Scientific aim: Economic situation in Lithuania forces to estimate decisions made by banking sector that influence not only individual countries but also the global economy. In this regard, there is a natural question of whether the process of underway stagnation should be judged as a timely economic development stage, or perhaps as the result of policies pursued by financial institutions? Prerequisites for the problem situation forces to overhaul loan portfolio managed by financial institutions, evaluate its change on the country's economy sectors, and to investigate these relationships forecasts. Findings: There is a strong link between financial sector development and economic growth. The results showed that the volume of loans has a very close interdependence with the GDP. Data obtained for loan portfolio forecasting for 2013-2017 showed that the growth of loans can be seen in all sectors except construction. Employment should grow only in public and retail sectors. Conclusions (limits, implications etc): The most relationship with GDP was established in retail and public sectors. Determining the correlation coefficients and regression equations between loans and employment the strongest relationship found in retail, industrial and construction sectors. The study encountered lack of data for 2012, since the information about the composition of the loan portfolio in different sectors since November 2011 is no longer provided to the Bank of Lithuania.",
keywords = "Financial institutions loan portfolio, Economical sectors, Macroeconomic indicators and economic growth",
author = "Daiva Jureviciene and Laura Pupelyteeeee",
year = "2013",
language = "English",
volume = "3",
pages = "1--16",
journal = "Creative and knowledge society: international scientific journal",
issn = "1338-4465",
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AU - Jureviciene, Daiva

AU - Pupelyteeeee, Laura

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N2 - Purpose of the article is to predict the interrelationship between the change of financial institutions loan portfolio and activities of the main economic sectors in Lithuania. Coherence between financial intermediation and economic growth cause a great interest of economists during the late decade. Prevailed opinion that banking sector is the reflection of economic growth and expansion and that its role – to intermediate in the saving and investing needs, reallocating funds between economic activities, was replaced by sentiment that strong and stable banking sector could be not only the result of economic development, but also the cause of this growth. The purpose of the article is to accomplish forecast of the influence of financial institutions loan portfolio change to the main economic sectors in Lithuania for 2013-2017 period. Methodology/methods Analysis of variation of loan portfolio according economic sectors shows the tendencies of financing of various activities in the past. Regression - correlation analysis helps to identify the influence of loan portfolio changes and their impact for GDP and employment in separate economic sectors. The forecasting of different economic sectors was made using extrapolation methods (smoothing, trend line) and econometric method (one dimensional regression). Scientific aim: Economic situation in Lithuania forces to estimate decisions made by banking sector that influence not only individual countries but also the global economy. In this regard, there is a natural question of whether the process of underway stagnation should be judged as a timely economic development stage, or perhaps as the result of policies pursued by financial institutions? Prerequisites for the problem situation forces to overhaul loan portfolio managed by financial institutions, evaluate its change on the country's economy sectors, and to investigate these relationships forecasts. Findings: There is a strong link between financial sector development and economic growth. The results showed that the volume of loans has a very close interdependence with the GDP. Data obtained for loan portfolio forecasting for 2013-2017 showed that the growth of loans can be seen in all sectors except construction. Employment should grow only in public and retail sectors. Conclusions (limits, implications etc): The most relationship with GDP was established in retail and public sectors. Determining the correlation coefficients and regression equations between loans and employment the strongest relationship found in retail, industrial and construction sectors. The study encountered lack of data for 2012, since the information about the composition of the loan portfolio in different sectors since November 2011 is no longer provided to the Bank of Lithuania.

AB - Purpose of the article is to predict the interrelationship between the change of financial institutions loan portfolio and activities of the main economic sectors in Lithuania. Coherence between financial intermediation and economic growth cause a great interest of economists during the late decade. Prevailed opinion that banking sector is the reflection of economic growth and expansion and that its role – to intermediate in the saving and investing needs, reallocating funds between economic activities, was replaced by sentiment that strong and stable banking sector could be not only the result of economic development, but also the cause of this growth. The purpose of the article is to accomplish forecast of the influence of financial institutions loan portfolio change to the main economic sectors in Lithuania for 2013-2017 period. Methodology/methods Analysis of variation of loan portfolio according economic sectors shows the tendencies of financing of various activities in the past. Regression - correlation analysis helps to identify the influence of loan portfolio changes and their impact for GDP and employment in separate economic sectors. The forecasting of different economic sectors was made using extrapolation methods (smoothing, trend line) and econometric method (one dimensional regression). Scientific aim: Economic situation in Lithuania forces to estimate decisions made by banking sector that influence not only individual countries but also the global economy. In this regard, there is a natural question of whether the process of underway stagnation should be judged as a timely economic development stage, or perhaps as the result of policies pursued by financial institutions? Prerequisites for the problem situation forces to overhaul loan portfolio managed by financial institutions, evaluate its change on the country's economy sectors, and to investigate these relationships forecasts. Findings: There is a strong link between financial sector development and economic growth. The results showed that the volume of loans has a very close interdependence with the GDP. Data obtained for loan portfolio forecasting for 2013-2017 showed that the growth of loans can be seen in all sectors except construction. Employment should grow only in public and retail sectors. Conclusions (limits, implications etc): The most relationship with GDP was established in retail and public sectors. Determining the correlation coefficients and regression equations between loans and employment the strongest relationship found in retail, industrial and construction sectors. The study encountered lack of data for 2012, since the information about the composition of the loan portfolio in different sectors since November 2011 is no longer provided to the Bank of Lithuania.

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KW - Economical sectors

KW - Macroeconomic indicators and economic growth

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JO - Creative and knowledge society: international scientific journal

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SN - 1338-4465

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