Measuring the impact of financial liberalization on Kuwait's economic growth - for the period 1990-2024

Abstract

Financial liberalization is defined as the process of removing government restrictions on local financial markets to improve their integration with international financial markets by liberalizing capital accounts in the balance of payments. This research is significant because it sheds light on the relationship between financial liberalization and economic growth in Kuwait, a vital topic given the country's efforts to reform its financial system and achieve sustainable economic development. It also contributes to clarifying the effectiveness of current financial policies and provides a knowledge base that can help decision-makers adopt more efficient financial strategies suited to the Kuwaiti economic reality. The research problem lies in the need to understand the relationship between financial liberalization and economic growth in Kuwait and to analyze whether the financial liberalization steps taken have actually contributed to improving economic performance or have failed to achieve their objectives due to surrounding circumstances. Therefore, the research problem can be formulated as the following question: Does financial liberalization have an impact on economic growth? To assess this relationship, the ARDL model was used, leading to several conclusions, the most important of which is that there is a significant impact of cash outflows on economic growth in Kuwait. A set of recommendations was presented, the most important of which was monitoring the flow of funds and where these investments are directed.