Revisiting The Supply-Leading Hypothesis On The Algerian Economy: An Analytical Study For The Period (2016-2022)

Abstract

This article focuses on the relationship between economic growth and bank finance in the Algerian economy during the period 2016-2022. In this context, the first two hypotheses are that economic growth is one of the determinants of monetary supply and financial development. The second is that financial development and increased bank loans, i.e. bank financing, affect expulsion on Algeria's GDP. To determine the nature of this relationship, we followed the analytical and descriptive approach based on the Bank of Algeria's data and its analysis of economic, monetary and policy changes during the study period. This allowed us to link financial development indicators such as bank loans to the private sector as a proportion of the gross domestic product (GDP) and the monetary mass index, thus concluding that the study period was characterized by a weak level of fiscal depth, meaning that the banking system does not contribute properly to financing economic activity. In addition, economy-oriented loans represented the most important source of monetary expansion through the Money Supply Index.