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Open AccessArticle

The Growth of Private Sector and Financial Development in Saudi Arabia

College of Business Administration, Prince Sattam Bin Abdulaziz University, Al-Kharj 11942, Saudi Arabia
Economies 2020, 8(2), 39; https://doi.org/10.3390/economies8020039
Received: 5 April 2020 / Revised: 28 April 2020 / Accepted: 7 May 2020 / Published: 12 May 2020
(This article belongs to the Special Issue The Theory Applications of Finance and Macroeconomics)
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. View Full-Text
Keywords: broad money; share market; bank credit; private sector growth broad money; share market; bank credit; private sector growth
MDPI and ACS Style

Haque, M.I. The Growth of Private Sector and Financial Development in Saudi Arabia. Economies 2020, 8, 39.

AMA Style

Haque MI. The Growth of Private Sector and Financial Development in Saudi Arabia. Economies. 2020; 8(2):39.

Chicago/Turabian Style

Haque, Mohammad I. 2020. "The Growth of Private Sector and Financial Development in Saudi Arabia" Economies 8, no. 2: 39.

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Note that from the first issue of 2016, MDPI journals use article numbers instead of page numbers. See further details here.

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