The Impact of Banking Development on Economic Growth: Empirical Evidence from Egypt during the period 1990-2023

Alsayd M. A.  Elseraty; Nesma Mohamed M.  Hussein; Mahmoud Gamal  Zakzouk

doi:10.33948/ESJ-KSU-18-1-5

Authors

Alsayd M. A. Elseraty Professor of Economics, Faculty of Economic Studies & Political Science, Alexandria University, Egypt. Author
Nesma Mohamed M. Hussein Department of Economics, Faculty of Economic Studies & Political Science, Alexandria University, Egypt. Author
Mahmoud Gamal Zakzouk Assistant Professor of Economics, Faculty of Economic Studies & Political Science, Alexandria University, Egypt - Academic Researcher at the Makkah Centre for Information and Economic Studies, Makkah Chamber, Saudi Arabia. Author

DOI:

https://doi.org/10.33948/ESJ-KSU-18-1-5

Keywords:

Banking Sector Development, Economic Growth, ARDL Model, Error Correction Model, Egyptian Economy.

Abstract

This study investigates the impact of banking sector development on economic growth in Egypt from 1990 to 2023. Using the Autoregressive Distributed Lag (ARDL) model, the research assesses the long-term effects of advances in the banking sector on economic performance. Additionally, the study incorporates the Error Correction Model (ECM) to capture short-term dynamics and relationships. The findings reveal a significant positive impact of banking development on economic growth in the long run, while also indicating that short-term results are largely consistent with the long-term outcomes. These insights highlight policy measures to maximize the growth impact of banking development in Egypt. Key recommendations include strengthening private-sector participation, encouraging foreign bank entry, and adopting international standards for supervision and risk management. Enhancing customer protection, raising public awareness of banking services, and investing in human capital through training and professional certifications are also emphasized. Additionally, promoting trade openness, boosting export competitiveness, and controlling inflation are identified as crucial to reinforcing the banking–growth relationship.