The commercial banks occupy a prominent position in stimulating economic activity through the role of financial intermediary between savers and borrowers, and contributing in the money supply. The study attempts to answer the question: Is there a relationship between Bank credit maturity structure and economic growth in Saudi Arabia?. to answer this question the study uses annual data during the period 1995 -2020, using the vector autoregression VAR, Granger causality tests, the Impulse Response Function, and the Variance Decomposition. The results of both the Impulse Response Function, and the Variance Decomposition indicate that the increases in RGDP are associated with higher bank credit, especially the long-term credit, which confirms the effectiveness of the credit channel in Saudi Arabia. Further, Granger causality tests suggest a bi-directional causal relationship between RGDP growth and long-term bank credit in KSA.The analytical results supported the hypothesis that the expansion of bank credit enhances economic growth. Where the study concluded that the expansion of bank credit, especially long-term credit in the KSA acts as a credit channel to stimulate economic growth. Therefore, economic growth is faster as commercial banks provide more long-term credit. The study recommends the need for more long-term bank credit as it is an important channel through which economic growth is nourished.
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