banking sector development and economic growth inpalestine; 1995-2014

This study uses both OLS regression estimation and Granger Causality test toinvestigate the relationship between the banking sector development andeconomic growth in Palestine over the period 1995-2014.OLS results show asignificant impact of banking size with a negative sign, insignificant impact ofcredit lending with a marginal one for lag credit andinsignificant impact ofefficiency on economic growth, respectively.Granger Causality testresultsshowone way causality runningfrom banking size to(GDP)economic growthandfrom banking efficiency to(GDP) per capitaeconomic growth one. Overall resultsreveals a weak nexus between banking sector development and economic growth.In specific, it recommends more improving in banking lending policy to beeffective in promoting economic growth.