The Impact of The inflation on The Development of The Financial Sector: Empirical evidence from Libya (1990-2021)

Abstract

The relationship between inflation and financial development still attracts the attention of many economists, but this relationship has not been resolved yet. This study attempts to find out the relationship between the rate of inflation and the development in financial Sector in the Libyan economy, by applying linear and Non-linear autoregressive distributed lag model during to the period (1990-2021). The results revealed the existence of a linear relationship in the short and long term between the variables of the study, where the inflation rate had a negative impact on the financial development in the short and long term using the (ARDL) model. The (NARDL) model tests also revealed that the effects of the inflation rate on the development in the financial Sector are not symmetrical in the long term.