Abstract
This study examines the relationship between banking sector development and investment dynamics in Romania over
the period 2010–2023. In the context of increasing financial complexity and post-crisis economic adjustments, the role
of banking systems in shaping investment processes remains a key area of research for emerging economies.
The analysis employs a multivariate Ordinary Least Squares (OLS) model to evaluate the impact of credit
expansion, lending interest rates, and macroeconomic conditions on both foreign direct investment (FDI) and domestic
investment, measured by gross fixed capital formation. The empirical results reveal a differentiated impact of banking
variables across investment types.
While domestic investment is positively and significantly influenced by credit to the private sector, FDI does not
exhibit a statistically significant relationship with domestic banking variables. These findings suggest the existence of a
dual investment structure in Romania, characterized by externally driven capital inflows and domestically financed
investment.
The study contributes to the literature by highlighting the asymmetric role of financial intermediation in
emerging economies and provides policy-relevant insights regarding financial deepening and investment strategies.
the period 2010–2023. In the context of increasing financial complexity and post-crisis economic adjustments, the role
of banking systems in shaping investment processes remains a key area of research for emerging economies.
The analysis employs a multivariate Ordinary Least Squares (OLS) model to evaluate the impact of credit
expansion, lending interest rates, and macroeconomic conditions on both foreign direct investment (FDI) and domestic
investment, measured by gross fixed capital formation. The empirical results reveal a differentiated impact of banking
variables across investment types.
While domestic investment is positively and significantly influenced by credit to the private sector, FDI does not
exhibit a statistically significant relationship with domestic banking variables. These findings suggest the existence of a
dual investment structure in Romania, characterized by externally driven capital inflows and domestically financed
investment.
The study contributes to the literature by highlighting the asymmetric role of financial intermediation in
emerging economies and provides policy-relevant insights regarding financial deepening and investment strategies.
Cuvinte cheie
banking sector
investment dynamics
financial intermediation
foreign direct investment
Romania
Istoric articol
Publicat
26.06.2026
Informații autori
Citare recomandată
PAUL-GHEORGHE BAHNEAN, EMANUEL GEORGE MESTERU (2026). BANKING SECTOR DEVELOPMENT AND INVESTMENT DYNAMICS IN ROMANIA: EVIDENCE FROM A MULTIVARIATE. Constantin Brâncuși University of Târgu Jiu Economics Series, 1(3), 138–150. https://doi.org/10.65631/jes.3.2026.12
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