“Impact of the Palestinian Banking System on the Economic Stability Variables: An Econometric Study Applied During the Period of 1994- 2014”

Abstract

The aim of this research is to analyze the
impact of the Palestinian banking system on the
economic stability variables during the period of
(1994- 2014) . To achieve this goal both evaluation
of the banking system in Palestine and the banking
variables have been conducted, depending on the
econometric techniques. A model of three equations
was built to testify the research hypotheses. Many
empirical results were found, but the most important
ones are: (1) The Palestinian banking system was
able to impose itself and has the ability to affect
the economic stability variables in a positive way.
(2) Variables such as volume of credit granted by
the commercial banks, banking density, the ratio
of deposits to the current (GDP) had all a positive
impact on the economic stability in which the
elasticity of these variables was estimated as (0.48%
, 0.34%, 0. 56%) respectively. (4)
The results proved that the existence of a
significant statistical relationship at 5% level
between variables such as, growth of the money
supply, volume of credit, number of banks and
branches, financial depth and inflation. (5) Results
showed that there is an inverse relationship between
both money supply and the financial depth and the
rate of unemployment by which these variables are
capable of reducing the rate of unemployment by-
0.20% and- 0.26% respectively.
Accordingly, a number of recommendations
were proposed in the interest of achieving economic
stability through the banking system in Palestine.