New in the West Bank: A Credit Boom Waiting for a Real Economy

The Palestinian economy is crippled by restrictions on trade, investments and access to natural resources, but driving around Ramallah you might get the impression it’s booming. Underground parking lots are brimming with Audis and BMWs, residential buildings are popping up at a frenetic pace, and cafes and restaurants are buzzing with customers.

Helping drive the appearance of wealth in the West Bank city, just 6 miles from Jerusalem, is the emergence of a consumer loan market that was all but non-existent just a decade ago. Its growth can be can be attributed to a 2008 law that forced banks operating in the Palestinian territories – which preferred to lend their money abroad – to extend at least 40 percent of their credit to locals. In the past four years, the debt market has more than doubled to $6.4 billion, of which $2.6 billion has gone to local residents, according to the Palestine Monetary Authority.