INTEREST RATE RISK ON LOANS AND SAVINGS IN THE SAUDI ECONOMY

Abstract

This study identifies the effects of the interest rates fluctuations on loans, saving and GDP in the Saudi economy and the risks associated. This study also determines how much do loans, and savings depend on the interest rates and the possible ways to prevent any future risks. The method used to find the relation between the interest rates, loans, saving and the GDP is Regression. The data used are for the time period from 2003 till 2013. The obtained result indicates that loans saving and GDP are heavily depending and on the interest rates in the Saudi Economy. Hence, any changes in the interest rates, affects both negatively and positively on the variables used in the Saudi economy. These results appear to affect the aggregate demand in Saudi Arabia. The importance of the study highlighted proper policies to loans and savings related to interest rate will help the private sector to prosper and grow. In addition, helping the policy makers to plan ahead the economic instability and find proper adjustments