The Impact of Financial Liberalization on Household Welfare in Egypt: An Econometric Analysis of Short-Run and Long-Run Dynamics

Abstract

This study aimed to examine the impact of financial liberalization, in both its domestic dimension (credit to the private sector) and external dimension (external assets and liabilities), on welfare in Egypt, measured by average household consumption per capita, over the period (1990–2023), using the ARDL co-integration approach with bounds testing, along with standard unit root tests for stationarity. The results confirmed the existence of a long-run co-integrating relationship among the variables, with a significant negative effect of financial liberalization on welfare in both the long run and the short run.