Liquidity Creation and Economic Growth: Are They Monotonically Related? Evidence from MENA Countries

Ali Almeshari (), Mohamed Hisham Bin Dato Haji Yahya (), Fakarudin Bin Kamarudin and Sha’ari Abd Hamid
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Ali Almeshari: Putra Business School (PBS), University Putra Malaysia, Serdang 43400, Malaysia
Mohamed Hisham Bin Dato Haji Yahya: Accounting and Finance Department, School of Business and Economics, University Putra Malaysia, Serdang 43400, Malaysia
Fakarudin Bin Kamarudin: Accounting and Finance Department, School of Business and Economics, University Putra Malaysia, Serdang 43400, Malaysia
Sha’ari Abd Hamid: Putra Business School (PBS), University Putra Malaysia, Serdang 43400, Malaysia

Economies, 2023, vol. 11, issue 1, 1-19

Abstract: Over the period 2000–2019, we reexamine the connection between finance, as measured by one of the primary banking sector functions—liquidity creation (LC)—and economic growth (EG) in 10 MENA countries panel. In a scenario seen as a dynamic heterogeneous panel, pooled mean group estimates demonstrate that LC and EG may have a favourable long-run connection while also having no influence in the short-run. In addition, results reveal an inverted U-shaped link between LC and EG over the short-term and long-term. This indicates that an excess of financial resources may be counterproductive to development in MENA nations.

Keywords: liquidity creation; economic growth; monotonicity; non-linear; ARDL( p,q ); MENA (search for similar items in EconPapers)
JEL-codes: E F I J O Q (search for similar items in EconPapers)
Date: 2023
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