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The Capital Markets of the Middle East and North African Region: Situation and Characteristics

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  • Thomas Lagoarde-Segot
  • Brian M. Lucey

Abstract

This paper compares market emergence in the Middle and East and North African (MENA) region with other emerging markets. We first consider the main components of market emergence, including the size, depth, activity, and transparency of the market, and proceed to a descriptive analysis. Aggregating these observations into four bootstrapped indexes, we analyze the factors leading to market emergence with a probit model. We find that market size and activity seem to affect market emergence, whereas pricing and transparency do not. Finally, decomposing country-level probabilities and implementing a cluster analysis suggest that the average process of market emergence is more pronounced in the MENA region than it is in other emerging areas, such as Latin America and Eastern Europe. Overall, the results suggest that the MENA capital markets may attract more capital flows in the future. However, the markets are still heterogeneous: Whereas Turkey, Israel, Jordan, and Egypt are moving closer to the standards of developed countries, Lebanon, Tunisia, and Morocco can still be viewed as frontier markets.

Suggested Citation

  • Thomas Lagoarde-Segot & Brian M. Lucey, 2008. "The Capital Markets of the Middle East and North African Region: Situation and Characteristics," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 44(5), pages 68-81, September.
    • Handle: RePEc:mes:emfitr:v:44:y:2008:i:5:p:68-81
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    References listed on IDEAS

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    Cited by:

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    2. Nadia Loukil & Mohamed Bechir Zayani & Abdelwahed Omri, 2010. "Impact of liquidity on stock returns: an empirical investigation of the Tunisian stock market," Macroeconomics and Finance in Emerging Market Economies, Taylor & Francis Journals, vol. 3(2), pages 261-283.
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    4. Sudha Narayanan & Sowmya Dhanaraj & Arun Kumar Gopalaswamy & M. Suresh Babu, "undated". "Trade, Financial Flows and Stock Market Interdependence: Evidence from Asian Markets," Working Papers 2017-158, Madras School of Economics,Chennai,India.
    5. Imen Zgueb Rejichi & Chaker Aloui & Duc Khuong Nguyen, 2014. "Assessing the efficiency of the MENA emerging stock markets: A sectoral perspective," Working Papers 2014-78, Department of Research, Ipag Business School.
    6. Chaker Aloui, 2015. "Volatility forecasting and risk management in some MENA stock markets: a nonlinear framework," Afro-Asian Journal of Finance and Accounting, Inderscience Enterprises Ltd, vol. 5(2), pages 160-192.
    7. Sowmya Dhanaraj & Arun Kumar Gopalaswamy & Suresh Babu M, 2013. "Dynamic interdependence between US and Asian markets: an empirical study," Journal of Financial Economic Policy, Emerald Group Publishing, vol. 5(2), pages 220-237, April.
    8. alessandrini, sergio, 2010. "Financial integration in the four Basins: a quantitative comparison," MPRA Paper 26080, University Library of Munich, Germany.

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