Finance–growth nexus in a changing political region: How important was the Arab Spring?
Mahmoud Arayssi and
Ali Fakih ()
Economic Analysis and Policy, 2017, vol. 55, issue C, 106-123
In the context of the Arab Spring, which started in 2011 and overcame the Middle East and North Africa (MENA) countries, this paper examines the growth effects of financial development, controlling for distinct macroeconomic environments, governance levels, and authoritarian regimes across MENA by using the Arellano–Bond dynamic panel estimation for 2005–2014. The results identify mitigating factors in MENA’s finance–growth relationships. Moreover, they show that the impact of finance on growth was positive pre-Arab Spring, but lost some of its significance post the Arab Spring, as some macroeconomic indicators improved, while others worsened. However, governance variables show significant improvement post-Arab Spring. These findings suggest that the financial development–growth nexus is contingent on socio-political reforms that shift the paradigm of institutional quality. Finally, this paper also discusses certain policies that may improve the efficiency of financial institutions and the government in generating inclusive economic growth.
Keywords: Finance–growth nexus; Public governance; Arab Spring; Panel data (search for similar items in EconPapers)
JEL-codes: G2 O16 P48 N25 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:55:y:2017:i:c:p:106-123
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