BANKING SECTORDEVELOPMENT AND ECONOMIC GROWTH IN PALESTINE; 1995-2014

Year 2016, Volume: 8 Issue: 2, 117 - 128, 01.12.2016

Gaber H. Abugamea

Abstract

This study uses both OLS regression estimation and Granger Causality test to
investigate the relationship between the banking sector development and
economic growth in Palestine over the period 1995-2014. OLS results show a
significant impact of banking size with a negative sign, insignificant impact of
credit lending with a marginal one for lag credit and insignificant impact of
efficiency on economic growth, respectively. Granger Causality test results show
one way causality running from banking size to (GDP) economic growth and
from banking efficiency to (GDP) per capita economic growth one. Overall results
reveals a weak nexus between banking sector development and economic growth.
In specific, it recommends more improving in banking lending policy to be
effective in promoting economic growth.

Keywords

Banking sector development, economic growth, OLS and Causality, Palestine

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