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Banking Sector Development and Economic Growth in Lebanon

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  • Awdeh, Ali

Abstract

We study the causality direction between banking sector development and economic growth in Lebanon over the period 1992-2011. Firstly, using Granger Causality tests, we find a one-way causality running from economic growth to banking sector measures such as deposit growth and credit to local private sector. Conversely, credit provided by banks to the resident private sector, and the banking sector size, efficiency, and concentration do not impact significantly economic growth. These results provide support for the demand-following hypothesis regarding the link between financial sector and economic development in Lebanon. Finally, regression estimates using OLS method confirm the above results.

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  • Awdeh, Ali, 2012. "Banking Sector Development and Economic Growth in Lebanon," MPRA Paper 121135, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:121135
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    References listed on IDEAS

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    More about this item

    Keywords

    Financial Development; Economic Growth; Granger Causality.;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development

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