Asymmetric Effects of Bank Credit on Economic Growth and Employment in the Agricultural Sector of Saudi Arabia.

This study investigates the impact of bank credit on output and employment in Saudi Arabia's agricultural sector, using quarterly data from 1999 to 2022. Employing an econometric approach, specifically the Nonlinear Autoregressive Distributed Lag (NARDL) model, the research examines the relationship between bank credit and economic variables such as output and employment. Additionally, the Granger causality test, derived from the vector error correction model, is used to explore the causal link between credit and economic growth. The findings reveal a long-run relationship between bank credit and both output and employment, with a positive credit shock negatively affecting these variables over time. In the short run, credit primarily influences output, while the causal relationship between output and credit is unidirectional, following the dependent demand theory. These results suggest that increasing credit in the agricultural sector could reduce both output and employment, urging a reconsideration of monetary policies targeting this sector. This study contributes to the literature by applying current data and the NARDL technique to analyze the non-linear dynamics between bank credit and economic growth, contrasting with previous research that assumed a linear relationship.