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The Impact of Bank Credit on Economic Growth in Lao PDR

Author

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  • Homsombath, Philavanh
  • Sisengnam, Keuangkham
  • Souvannasouk, Vannasinh
  • Sykhanthong, Sengsulixay

Abstract

This study examines the impact of bank credit on economic growth in Lao PDR from 1992 to 2022 using data from the World Development Indicators and the Bank of Laos. Employing the Cointegration and Error Correction Model (ECM) with the autoregressive distributed lag (ARDL) bounds testing approach, the results reveal that labor and bank credit to the private sector positively influence economic growth in both the short and long term, while credit to state enterprises has a negative impact. The findings suggest that the government should incentivize commercial banks to increase private sector lending and impose stricter regulations on state enterprise credit to mitigate non-performing loans (NPLs).

Suggested Citation

  • Homsombath, Philavanh & Sisengnam, Keuangkham & Souvannasouk, Vannasinh & Sykhanthong, Sengsulixay, . "The Impact of Bank Credit on Economic Growth in Lao PDR," Asian Journal of Applied Economics, Kasetsart University, Center for Applied Economics Research, vol. 31(2).
    • Handle: RePEc:ags:thkase:356817
    DOI: 10.22004/ag.econ.356817
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    References listed on IDEAS

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