Authors : Faris Nasif Alshubiri
Abstract: This study aims to investigate the impact of financial stability indexes on broad money growth in the commercial banking sector of Sultanate of Oman. This study used three indexes consists of financial growth index measured by bank credit to GDP (%), bank deposits to GDP (%) and Herfindahl-Hirschmann index, financial sensitivity index measured by inflation rate, GDP growth and fiscal balance as percentage of GDP. Finally, financial safety index measured by debt to GDP ratio (%), z-score and income velocity of broad money on the dependent variable measured by broad money (M2) growth. Six commercial banks used as a population of this study listed in Muscat Security Market (MSM) over the period 2008-2014. This study used OLS regression analysis and the results shows that there are a significant impact of financial growth index variables, financial sensitivity index variables and financial safety index variables except z-score variable on broad money growth at 1, 5 and 10% significant level. Multiple regression used and the results shows all independent variables of each index are high significant at 1% significant level. Finally, the regression runs for all independent indexes variables and the result shows there is a statistical impact of all financial stability indexes on broad money growth at 1% significant level. Pearson correlations matrix run in this study between all variables and shows there is a significant relationship between financial stability index and all variables of all indexes at 1, 10 and 5% significant level. The researcher recommends that banks are interested in the deals long-term credit contracts in order to impose control and supervision of the banking credit with interest to grant credit to customers outside of Oman and diversify the economy and create mechanisms to mitigate the potential risks.
Faris Nasif Alshubiri , 2017. The Impact of Financial Stability Indexes on Broad Money Growth: Empirical Study in Commercial Banks Listed in Muscat Security Market. International Business Management, 11: 407-414.