BANKING SECTORDEVELOPMENT AND ECONOMIC GROWTH IN PALESTINE; 1995-2014

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

Kaynakça

1. Abueida and Zibda, (2015) "The Role of Credit Facilities Granted from
2. Commercial Banks in Achieving Economic Growth in Palestine, An Econometrical Study for the period 1994-2013" Hebron University Journal for research. Vol.10, No(1), pp.207-233.
3. Awdeh, Ali, (2012) "Banking Sector Development and Economic growth in
4. Lebanon", International Research Journal of Finance and Economics, ISSN 1450- , Issue 100, pp. 53-62.
5. Beck, Levine and Loayza, (2000) "Finance and the Sources of Growth", Journal of Financial Economics, 58, pp.261-300.
6. Calderon and Liu, (2003) "The Direction of Causality between Financial
7. Development and Economic Growth", Journal of Development Economics,72, pp. 334. De Gregorio and Guidotti, (1995) "Financial Development and Economic
8. Growth", World Development, 23, pp.433-48. Fink, Haiss and Vuksic, (2005) "Importance of Financial Sectors for Growth in

9. Accession Countries” Conference on European Economic Integration, 2005 (CEEI), Vienna.
10. Goldsmith, Raymond. W, (1969), Financial Structure and Development, Yale
11. University Press, New Haven CN. Gurely and Shaw, (1969) “Financial Structure and Economic Development”,
12. Economic Development and Cultural Change, 34, pp.333-346. Harrison, Sussman and Zeira, (1999) "Finance and Growth: Theory and New
13. Evidence", Federal Reserve Board Discussion Paper, No.35. Jung, Woo S, (1986) "Financial Development and Economic Growth:
14. International Evidence", Economic Development and Cultural Change, 34, pp.336-346. King and Levine., (1993a) "Finance, Entrepreneurship, and Growth: Theory and Evidence", Journal of Monetary Economics, 32, pp.513-542.
15. King and Levine, (1993b) "Finance and Growth: Schumpeter might be Right",
16. Quarterly Journal of Economics, 108, pp.717-738. Koivu, Tuuli, (2002) "Do Efficient Banking Sector Accelerate Economic Growth in Transitional Countries?”, Bank of Finland, Institute for Economies in
17. Transition, Discussion Papers No.14. Levine, Ross, (2005) "Finance and Growth: Theory and Evidence”. In P. Aghion
18. & S. Durlauf (Eds.), Handbook of Economic Growth Vol.1, pp. 865-934. Levine, Loayza, and Beck, (2000) "Financial Intermediation and Growth:
19. Causality and Causes", Journal of Monetary Economics, 46, pp.31-77. McKinnon, Ronald. I, (1973) "Money and Capital in Economic Development",
20. The Brookings Institute, Washington, DC. Migdad and Hills (2005) " The Role of Islamic Banks in Financing Economic
21. Development in Palestine" Islamic University of Gaza Journal Vol.13(1), pp. 261. Neusser and Kugle (1998) "Manufacturing Growth and Financial Development:
22. Evidence from OECD Countries", The Review of Economics and Statistics, 80, pp.638-646. Petkouski and Kjosevski (2014) "Does Banking Sector Development Promote
23. Economic Growth? An Empirical Analysis for Selected Countries in Central and South Eastern Europe" Economic Research-Ekonomska Istrazivanja, ISSN:1331- X, pp.54-66.
24. Rachdi and Ben Mbark, (2011) " The Causality between Financial Development and Economic Growth: Panel data Cointegration and GMM system Approaches".
25. International Journal of Economics and Finance, 3, pp.143-151. The World Bank, (2012) West Bank and Gaza: Financial Sector Review,
26. Washington, DC: World Bank. Wachtel, Paul, (2001) "Growth and Finance-What do we know and how do we know it?", International Finance, 4, pp.335-362.