Effects of Macroeconomic Variables on Bank Credit in Saudi Arabia: An ARDL Bounds Testing Approach..

The primary aim of this paper is to look at the relationship between bank credit and Saudi Arabia's main macroeconomic variables from 1993 to 2019. The short-run and long-run effects of the major macroeconomic variables on bank credit were estimated using an autoregressive distributed lag (ARDL) process. In contrast to the negative effects of inflation on bank credit, the real exchange rate and money supply have positive long-run effects on bank credit, according to the report. The Gross Domestic Product (GDP) has a negative influence on total bank credit, which contradicts Keynesian theory. In the short run, GDP has a negative impact on bank credit, while inflation has a positive impact on bank credit. The study suggests some expansionary monetary and fiscal policies, such as raising asset prices and lowering borrowing rates, growing spending and cutting taxes to generate budget deficits for financial system stabilisation, and increasing national income to encourage sustainable and stable growth in bank credit, based on the results.

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