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Crude oil price and bank credit to the private sector in Saudi Arabia

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  • Chinazaekpere Nwani

Abstract

This study examines the influence of crude oil price on banking sector credit to the private sector in the Saudi Arabian economy using the autoregressive distributed lag (ARDL) approach to cointegration analysis extended to incorporate the presence of a structural break in the data series over the period 1972-2013. The results highlight the dual effects of crude oil price on the volume of banking sector credit to the private sector in the economy. A positive and significant long-run relationship between banking sector credit to the private sector and the international crude oil price coexists with a negative short-run relationship in the economy. A well-articulated policy framework that will lessen the exposure of banks to movement in crude oil prices and strengthen the level of credit creation by deposit money banks is therefore required in the Saudi Arabian economy.

Suggested Citation

  • Chinazaekpere Nwani, 2017. "Crude oil price and bank credit to the private sector in Saudi Arabia," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, vol. 14(2), pages 174-193.
    • Handle: RePEc:ids:ijecbr:v:14:y:2017:i:2:p:174-193
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