ECONOMETRIC ANALYSIS OF THE INTERACTION BETWEEN THEBANKING SYSTEM OF THE REPUBLIC OF ARMENIA AND THE REALSECTOR OF THE ECONOMY

The study examines the patterns of interaction between Armenia’s banking system and the real sector of economy using econometric methods. The key research questions are:  How does the activity of the banking system, particularly lending, affect the production and consumption components of the economy?  How do the main components of the real sector influence the banking system, particularly credit provision? To assess the interaction between Armenia’s banking system and the real sector, econo-metric models based on quarterly data (2000–2024) were constructed using the ordinary least squares (OLS) method, and forecasts were generated. The following hypothesis was proposed and tested: Armenia’s banking system can become a driving force for the development of the real economy by ensuring efficient resource mobilization into sectors with high productivity and socio-economic impact. Key findings from the model include: - Economic growth is influenced not only by current-period investments but also by past investments. Specifically, a 1% increase in gross investments five quarters prior contri-butes to an additional 642.8 million AMD in GDP growth in the current quarter. - An increase in loan volumes 1.5 and 2 years earlier leads to GDP growth of approximately 50,000 AMD and 60,000 AMD, respectively. - A 1 million AMD increase in net exports results in a reduction in lending volumes by around 428,000 AMD.