Financial Development - Economic Growth Relationship in Palestine

The relationship between financial development and economic growth in the economics literature remains uncertain as the financial system differs from one country to another, leading to different growth and economic development rates for each country. The aim of this study is to find long-term equilibrium links between financial development, economic growth and short-term financial development dynamics in Palestine using the Autoregressive Distributed Time Interval (ARDL) model, based on time series data from 2007: Q1-2020: Q1. The experimental results reveal a long-term negative relationship between the financial depth index (M2 / RGDP) and economic growth represented by real GDP, and the results also show a common complementarity between financial development and economic growth variables in Palestine in the long run.