The Palestinian Economy. Theoretical and Practical Challenges

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Di Martino – Sarsour
This process of growing inequality at geographic level went hand in hand with an
increase in the unevenness of income distribution. By the first half of 2006 The Gini
coefficient indicated that inequality of income distribution was about 64%. 6 Meanwhile
by the end of 2006 the number of people considered as “poor” in Palestinian Territory
increased by 13.6% as compared to the end of 2005, reaching the level of 2.1 millions. 7
Given that poorer people have less access, if any, to bank loans, changes in the
macroeconomic conditions of Palestine seemed to have increased the potential market for
micro finance.
On the other hand, by examining the ratio between the level of deposits and amount
of total facilities offered by commercial banks in Palestinian Territory in the last few
years we can see how prudent the approach was. During the mentioned period, the
average ratio of total facilities to deposits was only 33.8%, and while a growing trend is
noticeable up to 2006, the following years the tendency inverted (Figure 5).
Figure 5: Ratio of total credit facilities to total deposits
Source: Authors’ elaboration from The Palestine Monetary Authority (PMA) 2009.
6 Source: Palestinian Central Bureau of Statistics (2006).
7 Source: PCBS (2007). The Palestinian Central Bureau of Statistics (PCBS) and the Institute Universitaire
d’Etudes du Développement (IUED), define poverty line to be $2.7 per day, and very poor line is $1.35
per day.