Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/237160 
Year of Publication: 
2019
Citation: 
[Journal:] Financial Innovation [ISSN:] 2199-4730 [Volume:] 5 [Issue:] 1 [Publisher:] Springer [Place:] Heidelberg [Year:] 2019 [Pages:] 1-21
Publisher: 
Springer, Heidelberg
Abstract: 
Banking is an essential sector of Palestine's economy. More credits provided by banks are considered to have a positive impact on economic growth so that the overall objective of this study is to examine the impact of bank lending on economic growth in Palestine. The study employs the Augmented Dickey-Fuller to test for stationarity in the time series, The Johansen co-integration, Vector Autoregressive Model and Vector Error Correction Model are employed to identify the long-run and short-run dynamics among the variables, and Granger causality test in order to determine the direction of causality. The study finds that a long run relationship exists among the variables and insignificant short run relationship. Also, the study findings show that there is unidirectional causality and runs from GDP to bank lending. The insignificant contribution of bank lending to GDP is attributed to the fact that banks are not highly interested in lending to the production sector of the economy due to the high level of risk. However, the primary empirical evidence reveals that bank lending doesn't cause economic growth, but economic growth causes bank lending.
Subjects: 
Economic growth
Error correction model
Bank lending
Granger causality test
Palestine
Unit root tests
Solow growth model
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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