Credit Interest Rates, GDP Growth, and the Efficiency and Stability of Commercial Banks in Lebanon: A Conceptual Analysis of Macro-Financial Transmission under Sovereign Distress
DOI:
https://doi.org/10.63939/jies.tgzxhm03الكلمات المفتاحية:
Banking Stability، Banking Efficiency، Credit Interest Rates، GDP Growth، Sovereign-Bank Nexusالملخص
This study examines the role of women in peacebuilding in Lebanon, The stability and efficiency of commercial banking systems are closely linked to macroeconomic conditions, particularly interest rate dynamics and economic growth. In Lebanon, the financial crisis that emerged in 2019 exposed profound structural weaknesses in a banking model characterized by excessive sovereign debt exposure, prolonged exchange-rate rigidity, and dependence on deposit-driven funding. These developments transformed a sector previously regarded as financially resilient into one experiencing severe liquidity shortages, depositor restrictions, and a systemic loss of confidence. While previous studies have examined the determinants of bank profitability, financial stability, and sovereign risk independently, relatively limited attention has been devoted to understanding how these factors interact within economies experiencing simultaneous banking, sovereign, and currency crises.
This study develops a conceptual framework explaining the transmission mechanisms through which credit interest rates and gross domestic product (GDP) growth influence banking efficiency and financial stability in Lebanon. Rather than employing econometric estimation under conditions of distorted financial reporting and multiple exchange-rate practices, the study adopts a descriptive analytical approach to synthesize contemporary banking theory, macro-financial literature, and institutional evidence. The analysis demonstrates that interest rates may enhance short-term profitability under stable macroeconomic conditions but become destabilizing when accompanied by declining economic activity, deteriorating sovereign creditworthiness, and weakening depositor confidence. Likewise, sustained GDP growth strengthens banking performance by improving credit demand, asset quality, and repayment capacity, whereas economic contraction amplifies systemic banking risks.
The paper contributes to the literature by distinguishing accounting profitability from genuine intermediation efficiency and by extending the sovereign-bank nexus framework to economies in which sovereign financing dominates commercial banking activities. The findings suggest that banking-sector recovery requires coordinated reforms involving fiscal consolidation, sovereign debt restructuring, monetary stabilization, governance improvements, and renewed support for productive private-sector lending.
التنزيلات
السيرة الشخصية للمؤلف
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Aghiad Mohamad Adnan Dandachi، Al Jinan University, Tripoli, Lebanon
Aghiad Mohamad Adnan Dandachi is a Lebanese specialist in banking, finance, accounting, and banking law. He holds a PhD in Philosophy of Business Administration from Jinan University, an MBA from the American University of Technology, and academic qualifications in Business Administration, Accounting, and Finance from Saint Joseph University. He has extensive professional banking experience, having held managerial, credit, and authorized-signatory positions at Credit Libanais, Bank of Beirut, and Bank of Beirut and the Arab Countries. Since 1997, he has also taught financial mathematics, public finance, statistics, and communication skills within Lebanon’s technical education sector. He is a member of the Lebanese Association of Certified Public Accountants and provides consultancy services in banking, finance, accounting, and bank secrecy law.
ORCID
0009-0001-8518-1837
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