FINANCIAL DEVELOPMENT AND ECONOMIC GROWTH IN SERBIA

Abstract

Financial markets represent a crucial part of the overall economic and financial system of any country. It is the most sensitive part of the mentioned system because financial instruments are traded on it, and its main role is to facilitate capital allocation and risk management. An unstable financial system can cause a financial crisis with negative consequences that spread throughout the country's economy, thus, it is essential that the financial system is safe, sound and sustainable. Financial development is an integral part of economic development, and it implies healthy, safe and developed financial institutions and financial markets. The aim of this paper is to examine the relationship between financial development and economic development on the sample of Serbia as a developing country. The observation period is from 2003 to 2023. In order to examine the mentioned nexus, Pearson's correlation analysis was applied. The contribution of this paper would be that it can make an positive contribution to policy makers, especially in the area of the financial sector.