The Determinants of Stock Market Development in the MENA Region
The Determinants of Stock Market Development in the MENA Region

Author: Sami Ben Naceur

Publisher:

Published: 2005

Total Pages: 24

ISBN-13:

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Since few decades, a wide theoretical debate is concerned with the fundamental relationship between financial development and economic growth. An efficient financial system leads to a sustainable economic growth. In this study, we are interested especially with stock markets as a main component of the financial system according to the increasing role of financial markets in economies. So, their evolution plays an important role in economic growth. We shed some light on the macroeconomic determinants which must have an important influence on stock markets development. It is recognized that real or financial variables such as real income, saving rate, credit to private sector, M3, value traded, turnover, etc. could have a significant impact on market capitalization. The empirical study is conducted using an unbalanced panel data from twelve MENA region countries. Econometric issues are based on estimation of some fixed and random effects specifications. With such specifications in mind, peculiarities of MENA region countries are detected as well as differentiations among them. Thus, differences in market capitalization are explained. The empirical expected results must reinforce the idea which suggest the important role of economic development in promoting stock market development. Explaining power of variables such as real income, saving rate, inflation, financial intermediary development and stock market liquidity is confirmed. Banks and stock markets seem to be complements instead of substitutes.

What Drives Stock Market Development in the Middle East and Central Asia--Institutions, Remittances, Or Natural Resources?
What Drives Stock Market Development in the Middle East and Central Asia--Institutions, Remittances, Or Natural Resources?

Author: Andreas Billmeier

Publisher: International Monetary Fund

Published: 2007-07

Total Pages: 28

ISBN-13:

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In this paper, we assess the macroeconomic determinants of stock market capitalization in a panel of 17 countries in the Middle East and Central Asia, including both hydrocarbon-rich countries and economies without sizeable natural resource wealth. In addition to traditional variables, we include an institutional variable and remittances among the regressors. We find that (i) both institutions and remittances have a positive and significant impact on market capitalization; and (ii) both regressors matter, especially in countries without significant hydrocarbon sectors; whereas (iii) in resource-rich countries, stock market capitalization is mainly driven by the oil price.

Does Stock Market Liberalization Spur Economic and Financial Development in the Mena Region?
Does Stock Market Liberalization Spur Economic and Financial Development in the Mena Region?

Author: Sami Ben Naceur

Publisher:

Published: 2014

Total Pages: 21

ISBN-13:

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In order to investigate the impact of financial market liberalization on economic growth in the MENA region, we need to replace our contribution in the economic growth literature. Our study is related to the literature on policy impacting growth rather than the debate on quot;convergencequot; between low-income and high-income countries which dominates the current research on economic growth. Our study is one of the few studies that focus on MENA countries. Several issues are addressed about the impact of stock market liberalization on economic growth. Using annually data from 11 MENA countries over the 1979-2005 period, the empirical results indicate that stock market liberalization has no effect on economic and investment growth whereas the impact on stock market development is negative in the short-run but turns positive in the long-run. However, when we include certain pre-conditions for liberalizing the stock market, we find that a more developed stock market prior to liberalization, less government intervention and by not fully opening the economy to foreign trade reinforces the positive impact of liberalization on stock market development. These results could have some important policy implications; in which domestic financial reforms should precede policies that aim at liberalizing the stock market. This is not only easier and faster to accomplish, but from a policy sequencing perspective it pays to reform the trade regime before liberalizing fully the (portfolio component of the) capital account. In conclusion, reforms should first and foremost start in the domestic economy before open it full to foreign participation. Our results are robust to several specifications.

Stock Markets, Banks, and Economic Growth
Stock Markets, Banks, and Economic Growth

Author: Sami Ben Naceur

Publisher:

Published: 2005

Total Pages: 18

ISBN-13:

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Since few decades, a wide theoretical debate is concerned with the fundamental relationship between financial development and economic growth as well as the separate impact of banks on growth and financial markets on growth. Recent studies shed some light on the simultaneous effect of banks and financial development on growth. The empirical study is conducted using an unbalanced panel data from ten MENA region countries. Econometric issues will be based on estimation of a dynamic panel model with GMM estimators. Thus, peculiarities of MENA region countries will be detected. The empirical results reinforce the idea of no significant relationship between banking and stock market development, and growth. The association between stock markets and growth is even negative after controlling for bank development. This lack of relationship must be linked either to underdeveloped financial systems in the MENA region that hamper economic growth or to unstable growth rates in the region that affect the quality of the association between finance and growth. Moreover, in most transition economies the stock markets are very thin. This may lead to excessively volatile share prices. According to Singh (1997), stock price volatility may seriously hamper economic development.

Challenges of Growth and Globalization in the Middle East and North Africa
Challenges of Growth and Globalization in the Middle East and North Africa

Author: Mr.Hamid R Davoodi

Publisher: International Monetary Fund

Published: 2003-09-05

Total Pages: 44

ISBN-13: 9781589062290

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The Middle East and North Africa (MENA) is an economically diverse region. Despite undertaking economic reforms in many countries, and having considerable success in avoiding crises and achieving macroeconomic stability, the region’s economic performance in the past 30 years has been below potential. This paper takes stock of the region’s relatively weak performance, explores the reasons for this out come, and proposes an agenda for urgent reforms.

Determinants of Economic Growth in the MENA Region with Reference to Bahrain, Saudi Arabia, and Jordan
Determinants of Economic Growth in the MENA Region with Reference to Bahrain, Saudi Arabia, and Jordan

Author: Sara Saadeddin El Alayli

Publisher:

Published: 2006

Total Pages: 148

ISBN-13:

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The economic performance of the MENA region has been observed as being highly vo latile and vulnerable to external shocks. In order to recognize what needs to be done to sustain growth, the factors that are considered to spur or impair growt h should be identified. The project will present a cross-country model for 16 ME NA countries for the year 2002. The project will therefore, examine theoreticall y and empirically specific determinants of growth in the MENA region in order to assess the significance and impact of four variables on growth. The selected va riables are: macroeconomic variables (inflation and oil), a socio-economic varia ble (female labor force); and a political variable (democracy). Empirical eviden ce in the project suggests that oil has a positive impact on growth in the MENA region, however. The MENA region suffers from democracy deficit which some obser ves blame the presence of oil for that deficit. Empirical evidence in the projec t counters Barro's findings in his cross-country model. While Barro finds that d emocracy at the linear form should have a positive impact on growth and a negati ve one in the quadratic form, my results suggest the contrary trend. The oppress ive regimes in the region are adversely impacting the female labor force and dim inishing employment opportunities for them. Empirical evidence in the project is in accordance with the paper "Female Labor Force Participation in the Middle Ea st and North Africa"; female labor force is weakly but positively related to gro wth. Arguably, inflation has a negative impact on growth; however, our empirical evidence implies that inflation has a positive impact on growth in MENA. The p roject will conclude with three countries as case studies, Bahrain (an oil diver sified country), Saudi Arabia (a highly reliant on oil country), and Jordan (a n on-oil diversified country). The findings and conclusions in the selected countr ies comply with the findings on the rest of the MENA. Bahrain, Saudi Arabia, and Jordan, suffer from democracy deficit, low inflation, and low female labor forc e participation, and a high abundance and reliance on oil resulting in a more vo latile performance in Saudi Arabia compared to Bahrain and to Jordan.