Abstract
The research aims to provide a deep and comprehensive picture of the theoretical frameworks and empirical studies that dealt with the analysis and interpretation of the mechanism and channels of the impact that can be exercised by high levels of public budget deficit in strengthening and developing the financial sector, in addition to foreseeing an objective quantitative model that can diagnose the nature, size, and direction of this impact. And the interpretation of its transmission mechanism and channels, by adopting the methodology of aggregate regression models (PRM), static effect (FEM), and random effect (REM) that are based on the balanced longitudinal data (Balanced Panel Data) for the Gulf Cooperation Council countries for the period (2005-2017). The results of the assessment revealed the contribution of the public budget deficit variable in its negative impact on the financial sector development indicators, (BC) which expresses the bank credit granted to the private sector as a percentage of GDP, and (TD) which refers to the bank credit granted as a percentage Of total bank deposits, while its negative impact was shared in the two financial sector development indicators, (SMC), which expresses the ratio of market value to the gross domestic product, and (SMT), which reflects the stock market turnover and the economic growth variable (GRO) also influenced Negative in both (BC) and (TD).
Highlights
The research aims to provide a deep and comprehensive picture of the theoretical frameworks and empirical studies that dealt with the analysis and interpretation of the mechanism and channels of the impact that can be exercised by high levels of public budget deficit in strengthening and developing the financial sector, in addition to foreseeing an objective quantitative model that can diagnose the nature, size, and direction of this impact
The interpretation of its transmission mechanism and channels, by adopting the methodology of aggregate regression models (PRM), static effect (FEM), and random effect (REM) that are based on the balanced longitudinal data (Balanced Panel Data) for the Gulf Cooperation Council countries for the period (2005-2017)
The results of the assessment revealed the contribution of the public budget deficit variable in its negative impact on the financial sector development indicators, (BC) which expresses the bank credit granted to the private sector as a percentage of GDP, and (TD) which refers to the bank credit granted as a percentage Of total bank deposits, while its negative impact was shared in the two financial sector development indicators, (SMC), which expresses the ratio of market value to the gross domestic product, and (SMT), which reflects the stock market turnover and the economic growth variable (GRO) influenced Negative in both (BC) and (TD)
Summary
AL-Iragi 2 University of Mosul, College of Business and Economics, Department of Banking and Financial Sciences. AL-Dabbagh, University of Mosul, College of Business and Economics, Department of Banking and Financial Sciences. Article History: Received: 12/8/2020; Revised: 31/8/2020; Accepted: 16/9/2020; Published: 1/6/2021
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