The growth of private sector and financial development in Saudi Arabia

Artikel

In an attempt to diversify itself away from the dominance of oil on its economy, Saudi Arabia needs to emphasize on the growth of its private sector. Currently, the private sector's contribution to economic growth is meager as the oil sector dominates the economy. This study attempts to assess the role of financial development towards the growth of the private sector. Assessing this relationship is important, as it is quite probable that the dominant oil sector attracts the financial resources, affecting the private sector adversely. Johansen's method of cointegration is applied on the data for the period 1985-2018. The private sector's gross domestic product has a negative relation with the supply of money, positive relation with bank credit to private sector, and no significant relationship with share market capitalization, as shown by the results of the study. In addition, the private sector's growth has a positive and significant relationship with government expenditure, investment, and trade openness. Hence, the study recommends further strengthening of financial sector services. Besides the current trend on government expenditure, investment and trade openness should continue to enable the private sector to contribute significantly to the economic growth of the country. A previous study on the private sector's growth and financial variables is exclusively missing, and makes this study unique.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: Economies ; ISSN: 2227-7099 ; Volume: 8 ; Year: 2020 ; Issue: 2 ; Pages: 1-15 ; Basel: MDPI

Classification and Topics

• Classification: Wirtschaft ; Financial Markets and the Macroeconomy ; General Financial Markets: Other ; Institutions and Growth
• Subject: bank credit ; broad money ; private sector growth ; share market

Contributors, Location and Time

• Event: Geistige Schöpfung
• (who): Haque, Mohammad Imdadul
• Event: Veröffentlichung
• (who): MDPI
• (where): Basel
• (when): 2020

Further information

• DOI: doi:10.3390/economies8020039
• Handle: http://hdl.handle.net/10419/257088
• Last update: 20.09.2024, 8:22 AM CEST