The Impact of Financial Development on Economic Growth: A Case Study of Saudi Arabia

Authors

  • Abdelrahman Mohamed Saeed Department of Economics, College of Business, Imam Mohammad Ibn Saud Islamic University (IMSIU), Riyadh 11564, Saudi Arabia

DOI:

https://doi.org/10.32479/ijeep.23011

Keywords:

Saudi Arabia, Economic Growth, Financial Development, Autoregressive Distributed Lags, Cointegration

Abstract

The interrelation between economic growth and financial development has fuelled a debate in the area of economics. The financial development of countries is driven by the concert action of their governments regarding policy making, creating favourable financial infrastructure, and taking strategic initiatives for building a conducive financial sector. This study attempts to empirically assess the association between financial development and long-run growth in the context of Saudi Arabia. It uses select variables measured by the World Bank to predict economic growth and financial development. Furthermore, it analyses the link between financial development and economic growth in Saudi Arabia from 1980 to 2020, spanning a 40-year period. It uses a five-variable ARDL model using a supply-led approach. The Granger's test of causality and the VECM propose a unidirectional relationship flowing from the proxy of financial development to economic growth. This study's findings support the idea that financial development leads to economic growth in Saudi Arabia.

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Published

2026-05-04

How to Cite

Saeed, A. M. (2026). The Impact of Financial Development on Economic Growth: A Case Study of Saudi Arabia. International Journal of Energy Economics and Policy, 16(3), 48–54. https://doi.org/10.32479/ijeep.23011

Issue

Vol. 16 No. 3 (2026)

Section

Articles

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