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Abstract:
Since few decades, a wide theoretical debate is concerned with the fundamental relationship between financial development and economic growth. An efficient financial system leads to a sustainable economic growth. In this study, we are interested especially with stock markets as a main component of the financial system according to the increasing role of financial markets in economies. So, their evolution plays an important role in economic growth. We shed some light on the macroeconomic determinants which must have an important influence on stock markets development. It is recognized that real or financial variables such as real income, saving rate, credit to private sector, M3, value traded, turnover, etc. could have a significant impact on market capitalization. The empirical study is conducted using an unbalanced panel data from twelve MENA region countries. Econometric issues are based on estimation of some fixed and random effects specifications. With such specifications in mind, peculiarities of MENA region countries are detected as well as differentiations among them. Thus, differences in market capitalization are explained. The empirical expected results must reinforce the idea which suggest the important role of economic development in promoting stock market development. Explaining power of variables such as real income, saving rate, inflation, financial intermediary development and stock market liquidity is confirmed. Banks and stock markets seem to be complements instead of substitutes.

stock market development, fixed effects model, random effects model, MENA region

Abstract:
Since few decades, a wide theoretical debate is concerned with the fundamental relationship between financial development and economic growth as well as the separate impact of banks on growth and financial markets on growth. Recent studies shed some light on the simultaneous effect of banks and financial development on growth. The empirical study is conducted using an unbalanced panel data from ten MENA region countries. Econometric issues will be based on estimation of a dynamic panel model with GMM estimators. Thus, peculiarities of MENA region countries will be detected. The empirical results reinforce the idea of no significant relationship between banking and stock market development, and growth. The association between stock markets and growth is even negative after controlling for bank development. This lack of relationship must be linked either to underdeveloped financial systems in the MENA region that hamper economic growth or to unstable growth rates in the region that affect the quality of the association between finance and growth. Moreover, in most transition economies the stock markets are very thin. This may lead to excessively volatile share prices. According to Singh (1997), stock price volatility may seriously hamper economic development.

bank development, stock market development, economic growth, dynamic panel

Abstract:
The paper works with a sample of 95 newly privatized firms (NPFs) that went public through stock markets in four Middle East and North Africa countries (Egypt, Morocco, Tunisia and Turkey). We find that these firms experience significant increase in profitability and operating efficiency, and significant decline in employment and leverage. We also document strong performance improvements for firms that not relinquish control from the state, that are not sold to foreigners and that come from Egypt. Employment decline is more severe in Egypt and in firms where the state is no longer in control. Also, the results indicate that revenue firms and NPFs in Morocco yield significantly less leverage than control firms and those from other countries. As for the sources of these performance changes, we find that profitability change is negatively related to control relinquishment by the government and positively related with foreign ownership. Trade openness, change in real GDP over the privatization window, index of investor protection and foreign ownership are important determinants of the change in sales efficiency and output changes. These findings suggest that NPFs become more productive in environments where property rights are better protected and enforced and that foreign investors influence the firm's productivity through their monitoring role.

Privatization, Ownership Structure, Corporate Governance, Economic Liberalization, and MENA Countries.

Abstract:
In spite of popularity and theoretical simplicity of the one-factor Capital Asset Pricing Model (CAPM) used in the valuation of financial assets, researchers are more concerned with the important extension proposed by Fama and French (1993), that is, the Three-Factor Pricing Model (TFPM). Alongside beta, average stock returns could be explained by some size and book-to-market supplementary effects. With these two complementary models, estimation of the cost of equity is carried out for the Tunisian banking sector. In order to account for inter-individual heterogeneity, estimation of parameters is conducted according to random coefficient specifications within the context of panel data analysis.

Abstract:
In spite of popularity and theoretical simplicity of the one-factor CAPM used in the valuation of financial assets, more attention is now made to the important extension proposed by Fama and French [1993] rising the Three-Factor Pricing Model (TFPM). Alongside beta, average stock returns could be explained by some size and book-to-market supplementary effects. With these two complementary models, estimation of cost of equity is carried out for the Tunisian banking sector. To account for inter-individual heterogeneity, estimation of the coefficients is conducted according to random-coefficient specifications within the context of panel data analysis.

cost of equity, CAPM, TFPM, banking sector, random-coefficient model

Abstract:
In order to investigate the impact of financial market liberalization on economic growth in the MENA region, we need to replace our contribution in the economic growth literature. Our study is related to the literature on policy impacting growth rather than the debate on "convergence" between low-income and high-income countries which dominates the current research on economic growth. Our study is one of the few studies that focus on MENA countries. Several issues are addressed about the impact of stock market liberalization on economic growth. Using annually data from 11 MENA countries over the 1979-2005 period, the empirical results indicate that stock market liberalization has no effect on economic and investment growth whereas the impact on stock market development is negative in the short-run but turns positive in the long-run. However, when we include certain pre-conditions for liberalizing the stock market, we find that a more developed stock market prior to liberalization, less government intervention and by not fully opening the economy to foreign trade reinforces the positive impact of liberalization on stock market development. These results could have some important policy implications; in which domestic financial reforms should precede policies that aim at liberalizing the stock market. This is not only easier and faster to accomplish, but from a policy sequencing perspective it pays to reform the trade regime before liberalizing fully the (portfolio component of the) capital account. In conclusion, reforms should first and foremost start in the domestic economy before open it full to foreign participation. Our results are robust to several specifications.

Stock Market Liberalization, Economic and Investment Growth, Financial and Banking Sector Development, Dynamic Panel Data, MENA Countries

Abstract:
This study gives some issues concerning the relationship between inflation and the financial sector performances for some MENA region countries. The negative association is confirmed through the estimation of a dynamic panel model using the GMM methodology. On the other hand, a threshold effect is also identified in order to show that negative effect of inflation on financial sector becomes effective once the rate of inflation exceeds some threshold. Globally, we find that inflation has a negative and significant incidence on financial sector development but with no evidence of thresholds levels even after controlling for simultaneity and omitted variable biases. In other words, we show that a marginal increase of inflation is harmless to stock market performance and banking sector development whatever the rate of inflation.

cfinancial sector performances, inflation, dynamic panel data, MENA region.

Abstract:
Relatively little empirical evidence is available that estimates the relationship between asset price movements and monetary policy measures. This paper, which is the first study that focus on the linkage between monetary policy and stock market prices, aims at analyzing the interaction between monetary policy and asset markets in eight MENA countries. The countries that have to be considered in this study are: Bahrain, Egypt, Jordan, Morocco, Oman, Saudi Arabia, Tunisia, and Turkey. To this end, VAR methodology is used. The nature of the relationship between asset prices movements and monetary policy is currently a hotly debated topic in macroeconomics. The chief findings this study puts forward are the following: (i) In Bahrain, Oman, Jordan and Saudi Arabia the monetary policy seems to have a significant impact on stock market returns. (ii) The monetary policies of Tunisia, Morocco and to a less extent that of Egypt do not impact significantly on equity prices. (iii) Better still, the monetary policies' reactions, to stock market prices movements, are far from being homogenous across countries. While Saudi Arabia and Jordan monetary authorities respond vigorously to an increase in stock market returns, the other countries do not seem to exhibit any reaction. The paper attempts to put forth some explanations.

Monetary policy, Stock market, MENA countries, VAR methodology

Abstract:
In order to investigate the impact of financial market liberalization on economic growth in the MENA region, we need to replace our contribution in the economic growth literature. Our project is related to the literature on policy impacting growth rather than the debate on "convergence" between low-income and high-income countries which dominates the current research on economic growth. Our study is the first to focus on MENA countries and to address several issues about the impact of financial market liberalization on economic growth. The results indicate that stock market liberalization has no effect on economic and investment growth whereas the impact on stock market and banking sector development is negative in the short run but positive in the long run. In addition, it seems that the long-run positive effect of stock market liberalization on equity market growth can be enhanced by a larger stock market, by a government that intervenes less, and by not fully opening the economy to foreign trade before liberalizing the stock market. Our results are robust to several specifications.

Stock market Liberalization, Economic and Investment Growth, Financial and Banking Sector Development, Dynamic Panel Data, MENA Countries