Determinants of financial development in Oman: an empirical study

This paper seeks to explore and dissect the fundamental determinants influencing financial development in Oman, explicitly focusing on liquid liabilities, domestic credit to private sectors and financial system deposits as primary indicators. With a sample period spanning two decades (2000-2020), the study employs the autoregressive distributed lag model to scrutinise the relationships between financial development variables and a spectrum of independent factors, encompassing banking, macro-economic and government variables. Employing a time series framework and employing natural logarithmic values for variable measurement, the findings illuminate the nuanced impacts of various determinants on different facets of financial development in Oman. The bank Z-score, inflation, government spending and gross domestic product growth exhibit diverse influences, demonstrating varying degrees of significance in both short-term and long-term contexts. Some variables manifest notable positive or negative effects, while others display marginal or non-significant impacts.