Money demand under a fixed exchange rate regime: the case of Saudi Arabia

Hasanov, Fakhri; Al-Rasasi, Moayad; Alsayaary, Salah S.; Alfawzan, Ziyadh

doi:10.1080/15140326.2022.2039889

Cited by 11 publications

(2 citation statements)

References 70 publications

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“…To account for external conditions, we consider both oil prices and the global stock market volatility index (VIX) as key attributes influencing the level of non-performing loans. The inclusion of oil prices is mainly due to the essential role of Saudi Arabia as one of the largest oil-producing countries in the world, and changes in oil prices would have various macro and financial implications on the Saudi economy (Al Rasasi & Banafa 2015, Callen et al, 2015, 2019, Hasanov et al, 2022. For oil-exporting countries, upturns in oil prices reflect higher borrowers' income and firms' profitability implying lower NPL levels.…”

Section: Datamentioning

confidence: 99%

On the Determinants of Loan Default in the Saudi Banking System

Rasasi,

Alsabban

2024

AEF

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The main purpose of this paper is to examine the key determinants influencing the non-performing loans (NPLs) in the Saudi banking system. To do so, we consider a set of macroeconomic, banking, and external factors over the period 2010Q1-2023Q3. The contribution of this work to the literature includes providing fresh evidence following the COVID-19 pandemic, utilizing quarterly observations unlike preceding literature, and adopting time series econometric techniques to identify key elements influencing NPLs. A vector error correction model (VECM) is estimated to capture NPL dynamics over both the long-run and short-run. The empirical evidence reveals that NPLs are determined by a combination of macro, banking, and external factors. Specifically, macroeconomic and external variables appear to have a significant impact on NPLs, and their effects are in parallel with theoretical expectations. Likewise, the impact of return on equity on NPLs is significant as expected by theory; however, the impact of other banking factors is against expectations.

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Section: Datamentioning

confidence: 99%

On the Determinants of Loan Default in the Saudi Banking System

Rasasi,

Alsabban

2024

AEF

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“…Note that our focus is not bilateral nominal exchange rates and we do not discuss fixed versus flexible exchange rate regimes either. The dollar peg regime has been advantageous to the Saudi economy and will continue to be so until Saudi Arabia's exports are denominated in a mixture of currencies and the economy is diversified, as discussed by [20,21], among others. We intend to shed some light on how Saudi Arabia, a prominent oil-exporting country, can continue to increase its global competitiveness.…”

Section: Introductionmentioning

confidence: 99%

Oil and Non-Oil Determinants of Saudi Arabia’s International Competitiveness: Historical Analysis and Policy Simulations

Hasanov

Razek

2023

Sustainability

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To achieve sustainable economic growth, Saudi Vision 2030’s target is to improve Saudi Arabia’s ranking on the Global Competitiveness Index from 25 in 2015–2016 to within the top 10 by 2030. Saudi Arabia also aims to increase the share of non-oil exports in the non-oil GDP from 16% in 2016 to 50% by 2030. For policymakers to make informed decisions to achieve these goals, they need to understand the driving forces of Saudi Arabia’s competitiveness. To this end, we consider the real effective exchange rate (REER) as a measure of external price competitiveness, as it captures domestic and global price changes. We then examine the REER using a two-stage modeling framework. First, we estimate the REER equation, which allows us to assess the impacts of the determinants and evaluate currency misalignments as a competitiveness indicator. Second, we extend the KAPSARC Global Energy Macroeconometric Model (KGEMM) with the estimated equation, which provides a framework for simulating the competitiveness impacts of the theoretically formulated determinants and other variables relevant to policymakers. The framework also allows us to account for feedback loops. We conduct a policy scenario analysis to quantify the competitiveness effects of the Public Investment Fund’s (PIF) new strategy for 2021–2025. We derive the following policy insights. Authorities may wish to implement initiatives boosting future productivity and, thus, competitiveness, such as PIF investments. Policymakers should be regularly informed about currency misalignment. Government consumption and public investment projects should consider substituting imports with locally produced goods and services. Local content development would also help to diversify the Saudi economy. Finally, attracting more foreign investment and other assets from the rest of the world may lead to technological development and improvement in the economic, financial, and social infrastructure and business environment, all enhancing competitiveness.

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A Brief History and Structure of KGEMM

Hasanov

Joutz

Mikayilov

et al. 2023

SpringerBriefs in Economics

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It is useful to provide a brief overview of the development stages of KGEMM, as these stages shaped the structure of the current version of the model. As mentioned previously, KGEMM has been developed to have a better representation of the Saudi Arabian economic (sectoral and macro) and energy relationships. The main motivation for developing it was that there was no available model (including subscription based) that properly represented the Saudi Arabian economy and could comprehensively inform the policy decision-making process.

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Money demand under a fixed exchange rate regime: the case of Saudi Arabia

Cited by 11 publications

References 70 publications

On the Determinants of Loan Default in the Saudi Banking System

On the Determinants of Loan Default in the Saudi Banking System

Oil and Non-Oil Determinants of Saudi Arabia’s International Competitiveness: Historical Analysis and Policy Simulations

A Brief History and Structure of KGEMM

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