Financial development and economic growth in the MENA region -

Abstract

This project studies the relationship between financial development and economic growth in 19 countries in the MENA region over the period of 1980-2014. The paper provides empirical support that financial development affects economic growth negatively in the MENA region, notably when liquid liabilities, deposit money bank assets to deposit money bank assets and central bank assets, and private credit by deposit money banks to GDP are the financial development indicators. After a general introduction, Section 2 overviews the macroeconomy in the MENA region. Section 3 examines established growth theories followed by several empirical studies conducted around the world regarding this topic. Section 4 presents the empirical model conducted to study the effect of financial development on economic growth. Section 5 relays the results with a discussion of the analysis. Section 6 summarizes and concludes this paper.