Regional Formation and Development Studies

Sustainable economic development isbased on the favourable and stable business environment that promotescompetitiveness of companies. Commercial banks facilitate the capital flow fromthe less efficient sectors of the economy and businesses to more competitiveindustries and enterprises. The purpose of the research is to analyze the dynamicsof the Baltic States’ GDPs during years 2005–2010and to test the GDP correlation with the loans issued by domestic commercialbanks to the businesses. The key results of the analysis provide evidence aboutthe mutual relations between the leading and influencing factors in GDP andissued loans and serve as a basis for developing proposals on fostering the recoveryof Baltic States’ economies. The Granger testanalysis performed for the aggregate GDP and lending, as well as for six industries,provides controversial results and indicates that output in some industries hasmutual relationship with the availability of financial resources, however thebusiness sector development leads to the increase of credit granting thus ensuringthe development of the sector. The methods applied in the research comprise thesystematic, logical and comparative analysis, analysis of statistical data,expert method and generalization, as well as the econometric Granger causalitytest method.