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Volume :0 Issue : 0 2020      Add To Cart                                                                    Download

The Spillover Effect of Government Spending on Banking Performance in Kuwait

Auther : Nayef N. Alshammari

Aim of the Paper: This study investigates the impact of government intervention on the performance of the banking industry in Kuwait.
Study Design: The estimated model is tested using techniques of pooled OLS, fixed effect, and random effect.
Sample and Data: The yearly data set covers seven commercial banks from 1993 to 2017.
Results: Findings show that government spending in the Kuwaiti economy deteriorates the performance of the banking system. This suggests that massive government spending tends to crowd out the role of the private sector in the economy through limiting credit channels to the banking industry. Furthermore, findings show that the effect of the financial crisis on the banking performance was only pronounced during 2008 and 2009, whereas the effect progressively disappeared after the year 2009, highlighting the strength of banking industry to prevent global financial panic.
Conclusion: Such finding delivers evidence of government intervention failure in the banking system as a support of the nature of the “Keynesian revolution”.

 

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Nov 19, 2019

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