This research empirically investigates the long and short run causal relationships between economic growth, financial depth and lending rate in the unique economic setup of Saudi Arabia where 92% of total GDP comes from oil exports. Study uses two proxies for financial depth namely liquid liability indicator and banks claim to the private sector to GDP ratio, while economic growth is measured by real GDP per capita. This study intends to get answers for such questions as, if financial depth effects or causes economic growth in an oil based economy, and does lending rate have any relationship with financial depth or economic growth. Using the Johansens co-integration, Granger causality and Vector Error Correction Model (VECM) the study finds a single co-integrated equation which establishes a long run relationship among the variables. Finding suggests that financial depth causes lending rate which is in contradiction with most of the available literature; the study tries to explain this type of causality under the present circumstances. Furthermore no short term significant relationship exists among the variables as reflected by the results of the Wald Test, that is due to the unique political and economic setup under consideration.
The plinth emergence of infrastructures sector in the Kingdom of Saudi Debtors' Turnover Ratio (DTR), Creditors' Velocity (CRSV), Total Assets Turnover Ratio (TATR) and Net profit Margin (NPM). Profitability as a dependent variable is exhibited by Net profit Margin (NPM) while the selected ratios DER, ITR, DTR, CRSV, TATR and CRSV are expressed as independent variables. Based on the findings of the study, it is cogently revealed that there is a significant relationship between the three selected ratios and Net Profit Margin (NPM) of cement companies in Saudi Arabia.Keywords: Profitability, Financial ratios, Cement industry. Contribution/ OriginalityThis study is one of very few studies conducted on the relationship among different financial ratios and profitability of the companies in Saudi Arabia. The present research investigated the 2015 Vol.1, No.1, pp.1-12 ISSN(e): 2411-0523 ISSN(p): 2518-2536 DOI: 10.18488/journal.88/2015.1.1/88.1.1.12 © 2015 Quarterly Journal of Econometrics Research
This paper studies the technical efficiency of Saudi banking sector using stochastic frontier model. A sample of 12 banks over the period 2000 -2011 is selected to investigate their technical efficiencies in mobilizing deposits, allocating investments and generating income. The banks are categorized as Saudi-owned banks, Saudi -foreign owned banks and Islamic banks. The findings show some consistent pattern of these bank types; and there exist significant disparities among the banks in terms of technical efficiency. The banque Saudi Fransi stands out as a benchmark for the industry, and it is a Saudi -foreign owned bank type. The Saudi owned bank type has shown fluctuating performance during the period; and the Islamic bank type is not significantly different from Saudi-owned bank type. Keywords: technical efficiency, stochastic frontier analysis, bank type Contributions and implications of the paper: The paper appears to be the second of its kind, after Alkhathlan et al (2010) to study the technical efficiency of Saudi banks. The paper distinguishes itself from the previous work of Alkhathlan et al (2010) by adding the dimensions of philosophical foundations and ownership structures of the banks in the analysis. It also expands the analysis by looking at three output variables instead of one output variable. The paper tends to raises a further research question concerning the relationship between the bank performance and its ownership structure and philosophical foundation. Though, the current paper tends to suggest that there exists a relationship between the two; further researches with different samples from Saudi market and around the world are suggested to test this relationship.
We examine and compare the performance of 63 (21 Islamic and 42 conventional) GCC banks at two tiers, covering the period of 2010–2016. In the first tier, an industry-level analysis is conducted of each country, followed by an individual bank-level analysis in the second tier. Deposits, assets, and capital are taken as inputs to measure the outputs using data envelopment analysis techniques. At the industry level, we find that Islamic banking is at par with-if not better than-conventional banking in all terms of efficiency. Particularly, banking in Bahrain and KSA is among the best, whereas there is no scope for improvement in the UAE’s banking industry. This low performance could be attributed to a lack of standardization in products and schemes as well as the level of prudence in decision-making, governance, and operations. At the bank level, many Islamic banks perform even better than conventional banks. Most studies on GCC and MENA focus on the determinants and indicators of development and the banking industry growth in general. Uniquely, we further examine GCC banking performance at the individual bank level by incorporating the latest available data.
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