‘Lazy banks’: the case of Egypt

Gamal Haikal, Islam Abdelbary and Dina Samir

Macroeconomics and Finance in Emerging Market Economies, 2023, vol. 16, issue 3, 447-457

Abstract: The past decade has witnessed an acute acceleration of government borrowing in Egypt compared to the preceding thirty years. This was accompanied by a structural change toward more reliance on foreign debt. In the frame of these changes, the paper employs a VECM model to test the Egyptian banking sector for the “Lazy Bank“ hypothesis. The research extends the conventional crowding effect analysis to include households borrowing. The main conclusion is that government and households borrowing from the domestic banks in Egypt led to over one-to-one crowding out of private business credit.

Date: 2023
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DOI: 10.1080/17520843.2021.1998743

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