Effect of monetary policy on bank loans in Yemen the period of 1995-2014

There is a relationship between the central bank and the conventional and Islamic banks, which are mandatory as a part of the existing banking system as per the banking law of any country. The activities of banks are affected by monetary policy. The main purpose of the central bank as the monetary authority of the state is to ensure price stability. At the same time, the monetary policy applied by monetary authorities to conventional and Islamic banks plays a major role in mobilizing financial resources and attracting these resources to finance productive investments that serve the country's economy and put them into development service. In general, in developing countries and especially in Yemen, he faces the problem of scarcity of funding sources in the development process. Due to the economic crisis caused by the war in Yemen, due to various economic imbalances, there are deficiencies in converting savings into loans. The banking sector should be mobilized to serve the economic stabilization process and contribute to the realization of economic development in Yemen. Yemen should provide resources that can finance development plans and programs to ensure the stability of the economy and economic growth. In this study, methods used to test the dynamic relationships between bank loans and some selected macroeconomic variables are presented. In this study, dynamic relationships between bank credit and independent variables were carried out using January 2001 - January 2015 monthly data with the help of the Johansen Cointegration test and Granger causality methods.