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What drives the development of the MENA financial sector?


  • Sami Ben Naceur
  • Mondher Cherif
  • Magda Kandil


We explore a wide range of macroeconomic, fiscal and institutional factors in order to assess their relevance as determinants of financial development in MENA countries. A first interesting result is that bank and non-bank development are affected differently by the determinants under consideration. For example, growth does not promote banking activity; it promotes development of stock market liquidity. While we find that better institutions, in general, have a positive and significant effect on financial development, some institutional aspects matter more than others do. We also present evidence on the impact of macroeconomic factors, such as investment, inflation, savings, trade openness and financial liberalization, as key determinants of financial development in the MENA region, further reflecting a sharp contrast between bank and non-bank activity. Our results are robust to different specifications and different estimation techniques.

Suggested Citation

  • Sami Ben Naceur & Mondher Cherif & Magda Kandil, 2014. "What drives the development of the MENA financial sector?," Borsa Istanbul Review, Research and Business Development Department, Borsa Istanbul, vol. 14(4), pages 212-223, December.
  • Handle: RePEc:bor:bistre:v:14:y:2014:i:4:p:212-223

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    Cited by:

    1. repec:taf:applec:v:50:y:2018:i:6:p:574-595 is not listed on IDEAS
    2. Cherif, Mondher & Dreger, Christian, 2016. "Institutional Determinants of Financial Development in MENA countries," EconStor Open Access Articles, ZBW - Leibniz Information Centre for Economics, pages 670-680.
    3. Abid, Fathi & Bahloul, Slah & Mroua, Mourad, 2016. "Financial development and economic growth in MENA countries," Journal of Policy Modeling, Elsevier, vol. 38(6), pages 1099-1117.
    4. repec:taf:oaefxx:v:4:y:2016:i:1:p:1153872 is not listed on IDEAS
    5. Mohamed Ilyes Gritli & Fatma Marrakchi Charfi, 2016. "Capital Account, Institutional Quality, And Economic Growth In Mena Countries: A Gmm Approach," Annals of Financial Economics (AFE), World Scientific Publishing Co. Pte. Ltd., vol. 11(04), pages 1-23, December.
    6. Muhammad Shahbaz & Hrushikesh Mallick & Mantu Kumar Mahalik & Shawkat Hammoudeh, 2018. "Is globalization detrimental to financial development? Further evidence from a very large emerging economy with significant orientation towards policies," Applied Economics, Taylor & Francis Journals, vol. 50(6), pages 574-595, February.

    More about this item


    Financial development; Institutional quality; MENA; Panel data;

    JEL classification:

    • G - Financial Economics
    • G - Financial Economics
    • O - Economic Development, Innovation, Technological Change, and Growth


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