Testing Relationship between Private Investment and Financial System's Development: The Case of the EU Countries

In the paper, relationship between private investment and financial system's development was assessed in the case of the EU countries during 2000 – 2011, using cross-sectional data. The research results have shown that financial system is better developed in countries which GDP per capita is higher. Private investment growth rate and private investment to GDP ratio are higher in countries where financial system's development is lower, but in these countries private investment volatility is higher.