Transforming Finance in the Middle East and North Africa

Rabah Arezki and Lemma W. Senbet

No 9301, Policy Research Working Paper Series from The World Bank

Abstract: This paper argues for a transformation of finance to support the economic and social transformation of the Middle East and North Africa. The paper first documents the existing financial system in the region. The system is heavily skewed toward banking, relative to non-banking services, such as stock and corporate bond markets, with significant heterogeneity across countries. Second, the paper discusses the stance of macroeconomic policy in the region, which has had important implications for the destination, profitability, and quality of bank lending and the limited evolution of the financial system. Third, the paper explores the impact of technology on financial development, with particular attention to prospects for the development of fintechs. Entrenched incumbency of banks has limited the role of non-bank operators in fostering market contestability and fintech development. The paper is a call to the authorities and policy makers in the Middle East and North Africa to break with the status quo and business as usual. It underscores the need for a “moonshot approach†focused on establishing the foundations of a new digital economy and its role in promoting a well-functioning and inclusive financial economy to support the development needs of the region.

Keywords: Financial Sector Policy; Economics and Finance of Public Institution Development; De Facto Governments; Public Sector Administrative&Civil Service Reform; State Owned Enterprise Reform; Public Sector Administrative and CivilService Reform; Democratic Government; Consumption; Fiscal&Monetary Policy; Energy and Mining; Energy Demand; Energy and Environment (search for similar items in EconPapers)
Date: 2020-06-24
New Economics Papers: this item is included in nep-ara, nep-fdg and nep-pay
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:9301

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