The economic impact of financial development in different regions of Kazakhstan

This thesis investigates the economic impact of the financial development in different regions in Kazakhstan. Data from the Agency of Statistics of the Republic of Kazakhstan was used to construct a sample of regional economic indicators for the period 2003-2008. The analysis estimates the effect of loans issued to the private sector by the banks on GDP per capita in 16 regions divided in groups by main types of economic activity. Results suggest that loans on average have a significant and positive effect on GDP per capita growth, especially in high-income oil and gas producing regions. Moreover, loans also have a significant and positive effect on the level of GDP per capita in agricultural regions and other regions with different types of activities. However, the effect on GDP per capita in oil and gas regions as well as regions with developed mining industries is insignificant. These findings suggest that the Government of Kazakhstan should pursue policies that increase the availability of bank loans in low-income areas. This will help to overcome the disparity in economic growth among regions with different types of economic activity.