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Non-Oil Trade Openness and Financial Development Impacts on Economic Growth in Saudi Arabia

Author

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  • Mohammed Aljebrin

    (College of Business Administration, Majmaah University, PO Box 11952, Majmaah, Saudi Arabia.)

Abstract

This study investigates the relationship between non-oil trade openness and the financial development effect on economic expansion in Saudi Arabia, focusing on the 1990-2016 time period and applying the fully modified ordinary least squares (FMOLS) approach. Non-oil trade openness is represented by the sum of the non-oil exports and imports as a percentage of GDP. Financial market growth is demonstrated by the private sector's bank credits (the credit market development effect) and the general stock market index (stock market development). In the long run, the findings suggest that the non-oil trade openness, the private sector's domestic bank credit and the stock market are significant in their expected positive signs. In the short run, the results indicate that Non-oil trade openness and the stock market have an expected positive and significant coefficient but the domestic bank credit offered to the private industry has a noteworthy but negative unexpected sign. The error correction is correctly negatively signed and very significant with a considerable magnitude (-0.268) indicating a speed adjustment process. Consequentially, if the real GDP is out of equilibrium by 1 percent, a 26.8 percent adjustment will occur towards equilibrium by the end of the first year.

Suggested Citation

  • Mohammed Aljebrin, 2018. "Non-Oil Trade Openness and Financial Development Impacts on Economic Growth in Saudi Arabia," International Journal of Economics and Financial Issues, Econjournals, vol. 8(5), pages 251-260.
    • Handle: RePEc:eco:journ1:2018-05-32
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    References listed on IDEAS

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    Cited by:

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    2. Sami Alabdulwahab, 2021. "The Linkage between Oil and Non-Oil GDP in Saudi Arabia," Economies, MDPI, vol. 9(4), pages 1-21, December.

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    More about this item

    Keywords

    Financial Development; Trade Openness; Economic Growth; FMOLS; Saudi Arabia.;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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