Unveiling the Dynamics of Financial Institutions and Markets in Shaping Economic Prosperity in MENA

Ali Shaddady ()
Additional contact information
Ali Shaddady: Department of Finance, King Abdulaziz University, P.O. Box 80200, Jeddah 21589, Saudi Arabia

IJFS, 2023, vol. 11, issue 4, 1-21

Abstract: This research explored the relationship between financial development and economic growth in the MENA region from 1996 to 2022. Using panel data, it assessed whether financial institutions and financial markets had differing impacts on economic growth. Various statistical methods, including OLS, GMM, quantile, and U-tests, were employed to analyze this correlation. Our findings revealed a nonlinear relationship between financial development (institutions and markets) and economic growth, characterized by an inverted U-shaped curve. This relationship was influenced by the MENA region’s limited financial regulations and the “vanishing effect”. Financial institutions were found to have an insignificant impact on economic growth but played a role in constraining it. Conversely, financial markets significantly contributed to growth initially, but this effect diminished over time, eventually turning negative. Additionally, this research highlighted the positive influences of liquidity and exports on economic growth, while noting that the rule of law and political stability had adverse effects.

Keywords: financial development; nonlinear relation; economic growth; quantile (search for similar items in EconPapers)
JEL-codes: F2 F3 F41 F42 G1 G2 G3 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.mdpi.com/2227-7072/11/4/148/pdf (application/pdf)
https://www.mdpi.com/2227-7072/11/4/148/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jijfss:v:11:y:2023:i:4:p:148-:d:1299594

Access Statistics for this article

IJFS is currently edited by Ms. Hannah Lu

More articles in IJFS from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().