The Causality Issues in the Finance and Growth Nexus: Emperical Evidence from Middle East and North African Countries
AbstractThis paper explores the causality issue between financial development and economic growth in the Middle East and North Africa (MENA) region for different periods ranging from 1960 to 2002. The empirical evidence presented in the paper, either with cointegration techniques or Granger causality tests provides support to the hypothesis that causality is running from the real to the financial sector. Moreover, there is a little support to the view that finance is a leading sector in the determination of long-run growth in the countries of the region. These findings might be associated with four features: (1) the strict control of the financial sector in these countries for long periods of time; (2) the delay in the implementation of financial reforms in these countries; (3) the persisting issues in reform implementation (non-performing loans in particular); and (4) the high information and transaction costs that prevent resource promotion and financial deepening even in the face of financial reform.
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Bibliographic InfoArticle provided by De Gruyter in its journal Review of Middle East Economics and Finance.
Volume (Year): 2 (2004)
Issue (Month): 2 (August)
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Web page: http://www.degruyter.com
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- Omid Ranjbar & Zahra (Mila) Elmi & Hamid Reza Jahany, 2009. "Which is Leader in MENA region? Economic growth or financial development," Iranian Economic Review, Economics faculty of Tehran university, vol. 14(1), pages 131-153, spring.
- Ayadi, Rym & Arbak, Emrah & Ben-Naceur, Sami & De Groen, Willem Pieter, 2013. "Financial Development, Bank Efficiency and Economic Growth across the Mediterranean," CEPS Papers 7832, Centre for European Policy Studies.
- M. Kabir Hassan & Jung Suk-Yu, 2007. "Financial Sector Reform and Economic Growth in Morocco: An Empirical Analysis," NFI Working Papers 2007-WP-28, Indiana State University, Scott College of Business, Networks Financial Institute.
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