Structural Domestic Conditions, Regional and International Financial Integrations: Evidence from MENA

Erdal Özmen () and Fatma Tasdemir ()
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Erdal Özmen: Middle East Technical University, Ankara
Fatma Tasdemir: Sinop University

No 1728, Working Papers from Economic Research Forum

Abstract: This paper investigates the effects of international (IFI) and regional financial integrations (RFI) on structural domestic conditions represented by financial development and governance in Middle East and North Africa economies (MENA). To this end, we first measure RFI in the MENA by using bilateral financial flows. Our results suggest that too much IFI deters whilst higher levels of RFI promote financial development. High levels of IFI and RFI both tend to be positively associated with institutional quality and governance. The empirical findings in this paper propose that MENA economies should engage in structural reforms, encompassing liberalization of capital accounts, eliminating barriers to regional financial integration, enhancing the institutional environment and financial development. In this vein, policymakers may be suggested to formulate strategies with the goal of maximizing the beneficial effects of both international and regional financial integrations.

Pages: 23
Date: 2024-09-20, Revised 2024-09-20
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