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Review of Middle East Economics and Finance

Ed. by Dibeh, Ghassan / Assaf, Ata / Cobham, David / Hakimian, Hassan / Henry, Clement M.

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An Empirical Investigation of Oil-Macro-financial Linkages in Saudi Arabia

Ken Miyajima
Published Online: 2017-08-12 | DOI: https://doi.org/10.1515/rmeef-2017-0018


Against the backdrop of low oil prices, oil-macro-financial linkages in Saudi Arabia are analyzed by applying panel econometric frameworks (multivariate and vector autoregression) to macro- and micro-level data for 9 banks spanning 1999–2014. Lower growth of oil prices and nonoil private sector output leads dampen credit and deposit growth and lift nonperforming loan ratios. Positive feedback loops within bank balance sheets in turn dampen economic activity. U.S. interest rates are not found to be a key determinant. The banking system remains strong at present, but policy makers should monitor its health with the important macro-financial feedback loops in mind.

Keywords: macro-financial linkages; nonperforming loans; panel vector autoregression

JEL Classification: C63; E44; G21; G28


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About the article

Published Online: 2017-08-12

Citation Information: Review of Middle East Economics and Finance, Volume 13, Issue 2, 20170018, ISSN (Online) 1475-3693, DOI: https://doi.org/10.1515/rmeef-2017-0018.

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