The impact of bank credits on non-oil GDP: Evidence from Azerbaijan

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Mukhtarov S., Humbatova S., Seyfullayev İ.

Banks and Bank Systems, vol.14, no.2, pp.120-127, 2019 (Scopus) identifier

  • Publication Type: Article / Article
  • Volume: 14 Issue: 2
  • Publication Date: 2019
  • Doi Number: 10.21511/bbs.14(2).2019.10
  • Journal Name: Banks and Bank Systems
  • Journal Indexes: Scopus
  • Page Numbers: pp.120-127
  • Keywords: Azerbaijan, Co-integration, Economic growth, Exchange rate, Financial development
  • Azerbaijan State University of Economics (UNEC) Affiliated: Yes

Abstract

This study explores the relationship between bank credits, exchange rate and non-oil GDP in Azerbaijan, utilizing FMOLS, CCR and DOLS co-integration methods to the data spanning from January 2005 to January 2019. The results from the different co-integration methods are consistent with each other and approve the presence of a long-run relationship among the variables. Estimation results reveal that there is a positive and statistically significant impact of bank credits and exchange rate on the non-oil GDP in the long run for the Azerbaijani case which are in line with the expectations and with the theoretical findings discussed in theoretical framework section. This finding also indicates that a 1% increase in credit and real exchange rate increases non-oil GDP by 0.51% and 0.56%, respectively. The results of this paper are useful for the policymakers and promote the economic literature for further researches in the case of oil-rich countries.