The Impact of Bank Credit on Economic Growth: Libyan Bank of Commerce and Development

Abstract

All This paper mainly aimed to examine the role of Libyan Bank Commerce and Development in financing economic development through bank lending. In addition, a study is being conducted to identifying the extent of the interrelationship between bank credit and economic development. The major challenges encountered by the bank under study when developing plans and policies to contribute to the development process should also be identified and noted. The supervisory financial regulatory authorities in United States of America rely on the CAMELS rating system, which was developed in 1996 to assess the financial condition of a bank and identify its strengths and weaknesses based on its performance in five areas. A descriptive and quantitative analytical approach was used for the study by developing a standard model to determine the impact of bank credit affects Libyan gross domestic product. We collected data from the Libyan Bank Commerce and Development by financial ratios of the CAMEL model, bank credit and the Central Bank of Libya by gross domestic product growth. An important finding of the study is that the indicators of the Bank Commerce and Development are weak, which negatively impacts economic development. In this study, E-Views software was used to consider the normal distribution of the sample and to analysis the data. Furthermore, the study revealed that the bank credit of the Bank of Commerce and Development had a statistically significant effect on economic development. As a result, the bank shows a strong economic contribution to the development of economic sectors, especially small and medium enterprises.