Assessing the impact of banking incentives in Egypt on economic growth

Abstract

Governments have created a wide range of policies and tactics over the years in an effort to increase economic growth, living standards, and overall quality of life. Academics have tried to determine what elements, if any, most influence the success or failure of small and medium-sized firms in a number of study projects (SMEs). Government aid and incentives can take many different forms, including as tax rebates, banker bonuses, loan and interest rate guarantees, and more. SMEs usually look for outside support and resources, such bank incentives, to ensure their long-term viability. Small and medium-sized businesses (SMEs) have a natural tendency to innovate, thus banks ought to help them. In order to examine and explain the effect of banking incentives in Egypt on economic growth, this article will use time series data analysis that spans the years 1990 to 2020. Real interest rate, inflation rate, gross savings, domestic lending to the private sector, and IBRD loans are used as independent variables in various experiments to see how they affect the dependent variable, economic growth. Also, the paper employed the autoregressive distributed lag (ARDL) model and ordinary least squares regression (OLS). According to the findings, Egypt's real interest rate and inflation have a negative influence on economic growth, which is supported by empirical research, while Egypt's gross savings have a positive impact on economic growth, which is also supported by research. Previous empirical findings indicating IBRD loans have a favourable influence on economic growth in Egypt and that domestic credit to the private sector does not have a negative impact on economic growth in Egypt are not supported