Banking performance and industry growth in an oil-rich economy: Evidence from Qatar

Abstract

This article investigates whether bank performance measures of competition, efficiency, profitabilityand stability are contributory to industry growth for oil-rich countries. Qatar is chosen as a case study.The real growth of value added for the 42 non-oil sub-sector industries is regressed on the bankingperformance, together with the quantity-based indicators by taking account of the degree of externalfinance-dependence over the economically stable period 2000–2006. The results, which survive robust-ness and sensitivity tests, reveal that a competitive, efficient and stable banking system is indeed a sourceof enhancing financially-dependent industries to grow faster. Our empirical results serve to provide auseful insight for policy strategies of oil-exporting countries.