The Determinants of Stock Market Development in the MENA Region

13 Pages Posted: 28 Nov 2005 Last revised: 10 Oct 2022

See all articles by Sami Ben Naceur

Sami Ben Naceur

International Monetary Fund (IMF)

Samir Ghazouani

Business School of Tunis (ESCT); Economic Research Forum (ERF)

Mohammed Omran

Graduate School of Business, Arab Academy for Science and Technology

Date Written: August 31, 2005

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.

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

Suggested Citation

Ben Naceur, Sami and Ghazouani, Samir and Omran, Mohammed M., The Determinants of Stock Market Development in the MENA Region (August 31, 2005). Available at SSRN: https://ssrn.com/abstract=856385 or http://dx.doi.org/10.2139/ssrn.856385

Sami Ben Naceur (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Samir Ghazouani

Business School of Tunis (ESCT) ( email )

Campus Universitaire de Manouba
Manouba, 2010
Tunisia
+216 71 600 615 (Phone)
+216 71 601 311 (Fax)

Economic Research Forum (ERF) ( email )

21 Al-Sad Al-Aaly St.
(P.O. Box: 12311)
Dokki, Cairo
Egypt
+ 202 33318 600 (Phone)
+ 202 33318 604 (Fax)

Mohammed M. Omran

Graduate School of Business, Arab Academy for Science and Technology ( email )

Arab Academy For Science And Technology,
P.O. Box 1029, Miami, Alexandria, Egypt.
Alexandria, 1029
Egypt
+201000056526 (Phone)
(203) 5566 072 (Fax)

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