The Impact of the Banking Sector on Economic Growth in Yemen During the Period (1990-2022) Using ARDL Model

Abstract

     The developed banking sector has a significant impact on economic growth within any country. The importance of the banking sector stems from the important services it provides to the economy, including mobilizing local savings in the form of bank deposits, granting loans, monitoring operations, and facilitating financial transactions within the economy. This study aimed to measure the impact of the banking sector on economic growth in Yemen for the period 1990-2022 using quarterly data drawn from Central Bank reports and annual statistical books.      This study used the Autoregressive Distributed Lag (ARDL) model method, where it was concluded that the Yemeni banking sector was not developed during the study period and was unable to play an effective role in encouraging and stimulating economic growth in the country. Therefore, it is necessary to adopt targeted policies that seek to activate the role of the banking sector in order to support and stimulate the process of economic development in Yemen. The study came up with proposals, including: Policies must be adopted to activate the role of the banking sector in the economic development process in Yemen. It is also necessary to rely on comprehensive economic policies to determine the relationship between the banking sector and economic growth, given its important developmental impact on various economic trends within the Yemeni economy.

     It also encourages a banking expansion policy to increase access to new customers, while adopting a savings policy that is compatible with the characteristics of the Yemeni economy.