Abstract
This study empirically investigates the impact of bank profitability, as a complementary measure of financial development, on growth in the Arab countries between 1985 and 2016. Using a generalized method of moments (GMM) estimation to test the impact of the bank profitability on growth, this study utilises two variables in the econometric model which are return on assets and return on equity. This study reveals that both variables of bank profitability are positive and significant. This confirms that the bank profitability, beside other financial development variables, has positive impact on the growth. This study points out some important implications based on this result.
References
Abedin, T. 2017. “Impact of Banking Sector Efficiency and Profitability on Bangladesh Economy.” Economics Bulletin 37: 1708–19.Suche in Google Scholar
Adekola, A. 2016. “The Effect of Banks Profitability on Economic Growth in Nigeria.” Journal of Business and Management 18: 1–9.Suche in Google Scholar
Ahmed, A., and R. Huo. “China–Africa Financial Markets Linkages: Volatility and Interdependence.” Journal of Policy Modeling 40: 1140–64, https://doi.org/10.1016/j.jpolmod.2018.05.002.Suche in Google Scholar
Ajisafe, R. A., and F. M. Ajide. 2014. “Bank Competition and Economic Growth: Evidence from Nigeria.” Journal of Emerging Trends in Economics and Management Sciences 5: 419–25.Suche in Google Scholar
Albertazzi, U., and L. Gambacorta. 2009. “Bank Profitability and the Business Cycle.” Journal of Financial Stability 5: 393–409, https://doi.org/10.1016/j.jfs.2008.10.002.Suche in Google Scholar
Alfaro, L. 2010. “Does Foreign Direct Investment Promote Growth? Exploring the Role of Financial Markets on Linkages.” Journal of Development Economics 91: 242–56, https://doi.org/10.1016/j.jdeveco.2009.09.004.Suche in Google Scholar
Alkhazaleh, K. 2017. “Does Banking Sector Performance Promote Economic Growth? Case Study of Jordanian Commercial Banks.” Problems and Perspectives in Management 15: 55–64, https://doi.org/10.21511/ppm.15(2).2017.05.Suche in Google Scholar
Al-Khulaifi, A., K. Al-Sulaiti, and F. Al-Khatib. 1999. “Banking Performance and Economic Growth in Qatar: Rn Empirical Investigation.” Journal of Administrative Sciences and Economics 5: 5–27.Suche in Google Scholar
Andersson, F. N. G., Burzynska, K., and S. Opper 2016. Lending for Growth? A Granger Causality Analysis of China's Finance-Growth Nexus. Empirical Economics 51; 897–920.https://doi.org/10.1007/s00181-015-1034-8.Suche in Google Scholar
Anwar, S., and L. P. Nguyen. 2010. “Foreign Direct Investment and Economic Growth in Vietnam.” Asia Pacific Business Review 16: 183–202, https://doi.org/10.1080/10438590802511031.Suche in Google Scholar
Arab Monetary Fund. 2018. Joint Arab Economic Report. Abu Dhabi: United Arab Emirates.Suche in Google Scholar
Arayssi, M., and A. Fakih. 2017. “Finance–Growth Nexus in a Changing Political Region: How Important Was the Arab Spring?.” Economic Analysis and Policy 55: 106–23, https://doi.org/10.1016/j.eap.2017.05.001.Suche in Google Scholar
Arellano, M., and S. Bond 1991. Some Testes of Specification for Panel Data: Monte Carlo Evidence and Application to Employment Equation. The Review of Economics Studies 58; 277–97, https://doi.org/10.1016/0304-4076(94)01642-d.Suche in Google Scholar
Arellano, M., and O. Bover. 1995. “Another Look at Instrumental Variable Estimation of Error Components Models.” Journal of Econometrics 68: 29–51, https://doi.org/10.1016/0304-4076(94)01642-d.Suche in Google Scholar
Athanasoglou, P., N. Brissimis, and M. Delis. 2008. “Bank-specific, Industry-specific and Macroeconomic Determinants of Bank Profitability.” Journal of International Financial Markets. Institutions and Money 18: 121–36, https://doi.org/10.1016/j.intfin.2006.07.001.Suche in Google Scholar
Aurangzeb, Q. 2012. “Contributions of the Banking Sector in Economic Growth: A Case of Pakistan.” Economics and Finance Review 2: 45–54.Suche in Google Scholar
Barro, R. J., and J. -W. Lee. 1994. “Sources of Economic Growth.” Carnegie Rochester Conference Series on Public Policy 40: 1–46, https://doi.org/10.1016/0167-2231(94)90002-7.Suche in Google Scholar
Bassanini, A., S. Scarpetta, and P. Hemmings. 2001. Economic Growth: The Role of Policies and Institutions Panel Data Evidence from OECD Countries. OECD Working Paper 283, Retrieved from https://doi.org/10.1787/722675213381.Suche in Google Scholar
Benhabib, J., and M. M. Spiegel. 1994. “The Role of Human Capital in Economic Development Evidence from Aggregate Cross-Country Data.” Journal of Monetary Economics 34: 143–73, https://doi.org/10.1016/0304-3932(94)90047-7.Suche in Google Scholar
Bengoa, M., and B. Sanchez-Robles. 2003. “Foreign Direct Investment, Economic Freedom and Growth: New Evidence from Latin America.” European Journal of Political Economy 19: 529–45, https://doi.org/10.1016/s0176-2680(03)00011-9.Suche in Google Scholar
Berggren, N., A. Bergh, and C. Bjornskov. 2012. “The Growth Effects of Institutional Instability.” Journal of Institutional Economics 2: 187–24, https://doi.org/10.1017/s1744137411000488.Suche in Google Scholar
Blundell, R., and S. R. Bond. 1998. “Initial Conditions and Moment Restrictions in Dynamic Panel Data Models.” Journal of Econometrics 87: 115–44, https://doi.org/10.1016/s0304-4076(98)00009-8.Suche in Google Scholar
Borensztein, E., J. De Gregorio, and J. -W. Lee. 1998. “How Does Foreign Direct Investment Affect Economic Growth?.” Journal of International Economics 45: 115–35, https://doi.org/10.1016/s0022-1996(97)00033-0.Suche in Google Scholar
Carkovic, M., and R. Levine. 2002. Does Foreign Direct Investment Accelerate Economic Growth?. University of Minnesota Department of Finance. Working Paper, Retrieved from: SSRN https://doi.org/10.2139/ssrn.314924working-paper.Suche in Google Scholar
Cole, R. A., F. Moshirian, and Q. Wu. 2008. “Bank Stock Returns and Economic Growth.” Journal of Banking & Finance 32: 995–1007, https://doi.org/10.1016/j.jbankfin.2007.07.006.Suche in Google Scholar
Curwin, K. D., and M. C. Mahutga. 2014. “Foreign Direct Investment and Economic Growth: New Evidence from Post-Socialist Transition Countries.” Social Forces 29: 1159–87, https://doi.org/10.1093/sf/sot128.Suche in Google Scholar
De Mello, L. R. 1997. “Foreign Direct Investment in Developing Countries and Growth: A Selective Survey.” Journal of Development Studies 34: 1–34, https://doi.org/10.1080/00220389708422501.Suche in Google Scholar
Demirgüç-Kunt, A., and R. Levine. 1996. “Stock Market Development and Financial Intermediaries: Stylized Facts.” The World Bank Economic Review 10: 291–321, https://doi.org/10.1093/wber/10.2.291.Suche in Google Scholar
Dunning, J. H. 1993. Multinational Enterprises and the Global Economy. UK: Addison-Wesley.Suche in Google Scholar
Economic & Social Commission for Western Asia (ESCWA). 2008. Foreign Direct Investment Report. New York, USA: United Nations.Suche in Google Scholar
Ferreira, C. 2012. Bank Efficiency, Market Concentration and Economic Growth in the European Union. Working Papers Department of Economics 2012/38, ISEG - Lisbon School of Economics and Management, Department of Economics. University of Lisbonworking-paper.10.2139/ssrn.2138894Suche in Google Scholar
Gazdar, K., and M. Cherif. 2015. “Institutions and the Finance-Growth Nexus: Empirical Evidence from MENA.” Borsa Istanbul Review 15: 137–60, https://doi.org/10.1016/j.bir.2015.06.001.Suche in Google Scholar
Gwartney, J., R. Lawson, J. Hall, 2018. Economic Freedom of the World: Annual Report. Fraser Institute. Retrieved from: http://www.freetheworld.com.Suche in Google Scholar
Hakenes, H., I. Hasan, P. Molyneux, and R. Xie. 2015. “Small Banks and Local Economic Development.” Review of Finance 19: 653–83, https://doi.org/10.1093/rof/rfu003.Suche in Google Scholar
Ibrahim, M., and P. Alagidede. 2018. “Effect of Financial Development on Economic Growth in Sub-saharan Africa.” Journal of Policy Modeling 40: 1104–25, https://doi.org/10.1016/j.jpolmod.2018.08.001.Suche in Google Scholar
Kar, M., S. Nazlıoğlu, and H. Ağır. 2011. “Financial Development and Economic Growth Nexus in the MENA Countries: Bootstrap Panel Granger Causality Analysis.” Economic Modelling 28: 685–93, https://doi.org/10.1016/j.econmod.2010.05.015.Suche in Google Scholar
Kim, D.-H., and S.-C. Lin. 2013. “Interrelationships Among Banks, Stock Markets and Economic Growth: An Empirical Investigation.” Journal of Applied Economics 45: 4385–94, https://doi.org/10.1080/00036846.2013.786165.Suche in Google Scholar
King, R. G., and R. Levine. 1993. “Finance and Growth: Schumpeter Might Be Right.” The Quartely Journal of Economics 108: 717–73, https://doi.org/10.2307/2118406.Suche in Google Scholar
Klein, P., L. Weill 2017. Bank Profitability and Economic Growth. BOFIT Discussion Paper No. 15 Retrieved from: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3207171.10.2139/ssrn.3207171Suche in Google Scholar
Klein, P. -O., and L. Weill. 2018. Bank Profitability and Economic Growth. BOFIT Discussion Papers 15/2018, Bank of Finland, Institute for Economies in Transition.10.2139/ssrn.3207171Suche in Google Scholar
Kotrajaras, P. 2010. “Foreign Direct Investment and Economic Growth: A Comparative Study Among East Asian Countries.” Applied Economics Journal 17: 12–26.Suche in Google Scholar
Levine, R. 1997. “Financial Development and Economic Growth: Views and Agenda.” Journal of Economic Literature 35: 688–726.10.1596/1813-9450-1678Suche in Google Scholar
Levine, R. 2005. “Finance and Growth: Theory and Evidence”. In Handbook of Economic Growth, edited by Aghion, P. and Durlauf, S. Netherlands: Elsevier.10.1016/S1574-0684(05)01012-9Suche in Google Scholar
Levine, R., and S. Zervos. 1998. “Stock Markets, Banks, and Economic Growth.” The American Economic Review 88: 537–58.10.1596/1813-9450-1690Suche in Google Scholar
Mirzaei, A., T. Moore, and G. Liu. 2013. “Does Market Structure Matter on Banks’ Profitability and Stability? Emerging vs. Advanced Economies.” Journal of Banking & Finance 7: 2920–37, https://doi.org/10.1016/j.jbankfin.2013.04.031.Suche in Google Scholar
Mongid, A., and I. Tahir. 2011. “Impact of Corruption on Banking Profitability in ASEAN Countries: An Empirical Analysis.” Banks and Bank Systems 6: 41–8.Suche in Google Scholar
Moriyama, K. 2010. The Spillover Effects of the Global Crisis on Economic Activity in MENA Emerging Market Countries: An Analysis Using the Financial Stress Index. IMF Working Paper WP/10/8, Middle East and Central Asia Departmentworking-paper.10.5089/9781451961867.001Suche in Google Scholar
Petkovski, M., and J. Kjosevski. 2014. “Does Banking Sector Development Promote Economic Growth? an Empirical Analysis for Selected Countries in Central and South Eastern Europe.” Economic Research-Ekonomska Istraživanja 27: 55–66, https://doi.org/10.1080/1331677X.2014.947107.Suche in Google Scholar
Ploeg, F. V. D. 2011. “Natural Resources: Curse or Blessing?.” Journal of Economic Literature 49: 366–420, https://doi.org/10.1257/jel.49.2.366.Suche in Google Scholar
Sufian, F., and S. Habibullah. 2010. “Has Economic Freedom Fostered Bank Performance? Panel Evidence from China.” China Economic Journal 3: 255–79, https://doi.org/10.1080/17538963.2010.562039.Suche in Google Scholar
Tiwari, K., and M. Mutascu. 2011. “Economic Growth and FDI in Asia: A Panel-Data Approach.” Economic Analysis and Policy 41: 173–87, https://doi.org/10.1016/s0313-5926(11)50018-9.Suche in Google Scholar
Torres, N., O. Afonso, and I. Soares. 2012. “Oil Abundance and Economic Growth- A Panel Data Analysis.” The Energy Journal 33: 119–48, https://doi.org/10.5547/01956574.33.2.6.Suche in Google Scholar
World Bank. 2013. Transforming Arab Economies: Traveling the Knowledge and Innovation Road. Middle East and North Africa Region Report. Washington DC: USA: Middle East and North Africa Region Report.Suche in Google Scholar
Yazdani, M. 2011. “The Role of Performance of Privately Owned Banks in Economic Growth of Iran.” Australian Journal of Basic and Applied Sciences 5: 695–700.Suche in Google Scholar
© 2020 Walter de Gruyter GmbH, Berlin/Boston