Chapter 3: Impact of Stability on Economic Growth: A Case Study from the Financial Market

The banking system is expected to contribute many important aspects to the economic development in each country. The banking system is predominantly managed by the governments to ensure both system stability and economic development. The objective of this study is to assess the impact of the stability of the banking system on economic growth in 24 typical countries during the period 2011–2020. Using advanced quantitative research methods, analyzing the defects in the regression model as well as testing the robustness of the model, the research results show that the stability of the banking system has no impact on economic growth: although it has a positive effect, it is not statistically significant. The research also suggested that the investment rate of the economy, financial development, and quality of human resources have a positive impact on economic growth. However, foreign direct investment, trade openness, and population have no impact on economic growth.