Economic Growth and Financial Stability in MENA Countries: Does Exporting Oil Matters?

Emara, Noha and Zhang, Xiaojun and Liu, Shangchao (2019): Economic Growth and Financial Stability in MENA Countries: Does Exporting Oil Matters?

Abstract

Using system panel GMM dynamic panel on a sample of nineteen MENA countries over the period 1990 – 2014, the study estimates the effect of financial stability on economic growth. Using the principal component analysis to create a composite index of financial stability consisting of a banking crisis dummy variable, the ratio of credit to government and state-owned enterprises to GDP, and the ratio of domestic credit to private sector as a percent of GDP, the estimation results show financial stability in the MENA region is important for boosting economic growth in the region. Furthermore, when dividing the sample between oil and non-oil exporters, the results suggests no statistically significant difference between the two groups in terms of the impact of financial stability on economic growth. Our results are robust to the use of different fixed effects and random effects estimation methodologies.

• Item Type: MPRA Paper
• Language: English
• Keywords: Financial Stability; Economic Growth; System GMM; Fixed Effects; MENA Countries
• Subjects: N - Economic History > N2 - Financial Markets and Institutions; N - Economic History > N2 - Financial Markets and Institutions > N25 - Asia including Middle East; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O16 - Financial Markets ; Saving and Capital Investment ; Corporate Finance and Governance; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O40 - General

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