Does Bank Profitability Stimulate Economic Growth in the Arab Region?

Aziz Omar Ghazy ()
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Aziz Omar Ghazy: Australian National Institute of Management and Commerce (IMC), Sydney, NSW, Australia

Review of Middle East Economics and Finance, 2020, vol. 16, issue 2, 14

Abstract: This study empirically investigates the impact of bank profitability, as a complementary measure of financial development, on growth in the Arab countries between 1985 and 2016. Using a generalized method of moments (GMM) estimation to test the impact of the bank profitability on growth, this study utilises two variables in the econometric model which are return on assets and return on equity. This study reveals that both variables of bank profitability are positive and significant. This confirms that the bank profitability, beside other financial development variables, has positive impact on the growth. This study points out some important implications based on this result.

Keywords: bank profitability indicator; financial development; economic freedom; GMM (search for similar items in EconPapers)
JEL-codes: C23 C36 G01 G21 O16 O40 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1515/rmeef-2019-0017

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