IMPACT OF THE CENTRAL BANK’S INTERVENTION ON THE INDUSTRIAL PRODUCTION GROWTH IN LEBANON BETWEEN 2001-2022

Abstract

The present study aimed to compare the impact of the Central Bank’s intervention on the industrial production growth in Lebanon. It investigated the outcome of monetary policy tools (represented by interest rate subsidy, release of reserve requirements, industrial commercial credits and interest rates on loans) and macroeconomic factors (represented by industrial capital expenditure, industrial exports, imports of industrial raw material and Brent crude oil) on the industrial production growth (captured by the industrial production index). The underlying aim was to demonstrate that the Central Bank’s intervention impacted the industrial production growth.The study analysed data for the period 2001-2022 and followed a deductive approach within a positivist framework, using Multiple Linear Regression, Lagged OLS and Robust Least Square models as research techniques. It was found that the release of reserve requirements held a remarkable positive significance in shaping the industrial growth trajectory. Following closely behind in terms of positive impact was the interest rate on USD-denominated loans. In contrast, the study revealed that the government interest rate subsidy did not exhibit a major influence, nor did the commercial banks’ credits to a lesser extent. However, it found a compelling significance between most of the macroeconomic factors and the industrial production growth.The study suggests that SMEs should diversify funding strategies and adopt cost-efficient practices, while policymakers should pursue fiscal reforms and tailored support to create a resilient industrial economy capable of withstanding economic challenges. This research acknowledges limitations including the narrow scope of eight independent variables, data scarcity, and Lebanon’s unstable economic conditions, which may distort results. The reliance on outdated statistics, combined with significant internal and external shocks, could lead to biases. Future research should incorporate additional dependent and independent variables, expand the study period, employ non-linear models, and integrate qualitative data to enhance the understanding of the Central Bank’s intervention.

Document Type

Thesis

Publication Date

2024

Embargo Period

2025-12-09

Creative Commons License

Creative Commons Attribution-NonCommercial 4.0 International License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License

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