The Effect of Suspended Salary Allowance on Business Loan in Saudi Arabia

Abstract

The research was carried out to study two factors; first the impact of suspended Salary allowance (about 20% of Saudi Salary per month) on borrowing loans from national and commercial Saudi's banks. Secondly, to analyze the effects of suspended Salary allowance on re-payment of the loans. This study established that most Saudi banks’ customers should be well-aware of the influence of suspended Salary allowance on borrowing loans from banks and re-payment of the loans. It was noticed that the provision of loans to Saudi people after governmental action regarding suspended Salary allowance had a great impact on their businesses performance. The study also found that salary cuts together with other factors including high interest rates may be the most important causes of poor business performance.