IDEAS home Printed from https://ideas.repec.org/a/alv/journl/v2y2020i3p78-95.html
   My bibliography  Save this article

The Relationship of Consumer Loans, Credit Cards and the Interest Rate to Inflation in Saudi Arabia: An Econometric Study through Quarter Data for the Period 2007-2019

Author

Listed:
  • Zaid Ahmed Alazaki

    (Gaziantep University (Turkey))

Abstract

This study aimed to measure the effect of consumer loans and the interest rate on inflation in Saudi Arabia through quarterly data for the period 2007-2019 and to perform the standard statistical tests needed for 'unit root testing,' 'Johnson Cointegration', 'Causation Granger test', 'VECM model' The results of the Johnson Cointegration test showed that there is a long-term equilibrium relationship between (Consumer loans, interest rates) and inflation. Moreover, the result of the Granger causality test showed a causal relationship from one direction with significant statistical significance between Consumer loans and inflation, also a causal relationship from one direction between inflation rate and interest rate. Besides, the results of the VECM test also confirmed a short-term relationship between Consumer loans and inflation, which is in line with the outcome of the Granger test. This study recommends paying special attention to credit portfolio controls and encouraging banks to direct loans towards production and investment sectors that positively affect economic growth rather than granting consumer loans, which in turn contributes effectively to achieving the vision of Saudi Arabia 2030 according to the scope of the financial sector development program.

Suggested Citation

  • Zaid Ahmed Alazaki, 2020. "The Relationship of Consumer Loans, Credit Cards and the Interest Rate to Inflation in Saudi Arabia: An Econometric Study through Quarter Data for the Period 2007-2019," Management & Economics Research Journal, Faculty of Economics, Commercial and Management Sciences, Ziane Achour University of Djelfa, vol. 2(3), pages 78-95, june.
    • Handle: RePEc:alv:journl:v:2:y:2020:i:3:p:78-95
    DOI: 10.48100/merj.v2i3.111
    as

    Download full text from publisher

    File URL: https://mer-j.com/merj/index.php/merj/article/view/111
    Download Restriction: no
    File URL: https://libkey.io/10.48100/merj.v2i3.111?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Keywords

    Bank Loans; Interest Rate; Inflation; Cointegration; Granger Test; VAR;
    All these keywords.

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • G2 - Financial Economics - - Financial Institutions and Services

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:alv:journl:v:2:y:2020:i:3:p:78-95. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chihab Ilimi (email available below). General contact details of provider: https://edirc.repec.org/data/fedjedz.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.