What Influences Bank Lending in Saudi Arabia?

27 Pages Posted: 23 Mar 2017

See all articles by Ken Miyajima

Ken Miyajima

Bank for International Settlements (BIS) - Monetary and Economic Department

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Date Written: February 2017

Abstract

Determinants of bank-level credit growth in Saudi Arabia are investigated by applying a panel approach to data spanning 2000-15. Strong bank balance sheet conditions, economic activity, and oil prices support bank lending. Reduced bank concentration appears to have helped. Lending remained robust in 2015 despite oil prices having declined, helped by strong bank balance sheets and a reduction in bank 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.

Keywords: Panel analysis, Econometric models, Time series, Saudi Arabia, Loans, Middle East, Bank credit, Banks, Credit expansion, macro-financial linkages, fixed-effects panel model, Models with Panel Data, Financial Markets and the Macroeconomy

JEL Classification: C33, E44, G21

Suggested Citation

Miyajima, Ken, What Influences Bank Lending in Saudi Arabia? (February 2017). IMF Working Paper No. 17/31, Available at SSRN: https://ssrn.com/abstract=2938330

Ken Miyajima (Contact Author)

Bank for International Settlements (BIS) - Monetary and Economic Department ( email )

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