The aim of this study is to know the role of bank credit in Kuwait's economic growth in a number of sectors through quarterly data for the period 2000 - 2017, through standard analysis method using a number of tests such as “Unit root tests”, “Johansen cointegration test“, “ Granger Causality Test " and the " Vector Error Correction Model“.
The results of the long term estimation were showing clearly that the non oil gross domestic (GDP) is positively correlated with Total Banking Credit (TBC), Bank Credit granted to Construction and Real estate sectors (BCCR), Bank Credit granted to Industry sector (BCI) and Bank Credit granted to Trade sector (BCT), it shows also the small relationship between the study variables in short-run.
Granger causality result shows the causal relationship for one direction from non oil gross domestic product to Bank credit granted to Industry sector, and also construction and real estate sector. As well the results explained the existence of bidirectional causality between bank credit at construction real estate sector and Bank Credit for trade sector. During this study we observed bidirectional causality among Total Bank Credit and bank credit to Industry and between bank credit at trade sector to bank credit at construction real estate sector. Whereas the real estate sector and industry sectors are one of the most important sectors in the Kuwait economy.
In this study we found out that the bank credits in a basic economic sectors has not prominent role in the growth of the Kuwaiti economy, so the need arises to improve role of Banking sector inorder to enhance economics through the Central Bank of Kuwait by liberalize financial restrictions and encourage banks to expand the granting of credit to the economic sectors, which will leading to promote economic growth.
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In-Text Citation: (Arslan, Bozgeyik, & Al-Azaki, 2019)
To Cite this Article: Arslan, I., Bozgeyik, Y., & Al-Azaki, Z. (2019). The Role of Bank Credit in Kuwait Economic Growth. International Journal of Academic Research in Business and Social Sciences, 9(2), 686–700.
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