Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/316465 
Authors: 
Year of Publication: 
2020
Citation: 
[Journal:] Islamic Economic Studies (IES) [ISSN:] 2411-3395 [Volume:] 27 [Issue:] 2 [Year:] 2020 [Pages:] 125-155
Publisher: 
Emerald, Bingley
Abstract: 
Purpose Determinants of credit growth in Saudi Arabia are investigated. Design/methodology/approach A panel approach is applied to macroeconomic and bank-level data spanning 2000 -15. Findings Bank lending is supported by strong bank balance sheet conditions (high capital ratio, and growth of NPL provisioning and deposits), and higher growth of both oil prices and non-oil private sector GDP. Lower bank concentration also helps, likely through greater competition, so does stronger institution. Consistent with the literature, lending by Islamic banks may be more responsive to economic activity. Lending remained robust in 2015 despite oil prices having declined, helped by strong bank balance sheets and as banks reduced their holdings of "excess liquidity". To support bank lending in the period ahead, bank balance sheets need to remain strong. Fiscal adjustment and a reduced reliance on banks to finance the budget deficit would support credit provision to the private sector. Originality/value The paper is first to analyze in detail determinants of bank lending in Saudi Arabia applying a panel approach to bank level data, and draws critical policy implications.
Subjects: 
Bank credit
Fixed-effects panel model
Macro-financial linkages
JEL: 
C33
E44
G21
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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