ERF 27th Annual Conference
Financial Integration, Inclusion, and Stability during Crises: Insights from the Middle East and North Africa (MENA) Region
No.
ERF27_137
Publisher
ERF
Date
May, 2021
Topic
C5. Econometric Modeling
G1. General Financial Markets
C2. Single Equation Models
F3. International Finance
O1. Economic Development
The main objective of this paper is to analyze the interrelationships between financial integration, inclusion, and stability in the MENA region and the role of crises in these linkages. This is the first study that tries to examine the interrelations among these variables in MENA’s financial markets. To achieve its objective, the article starts by assessing regional integration among MENA stock markets using correlational analysis and the DCC GARCH models. Then, it builds a PVAR model to examine the relationships between integration, inclusion, and stability in MENA. Results show that regional integration is still limited in MENA, despite of growing linkages with other international markets. Regional integration in MENA is more pronounced among countries that lie within closer geographical proximities. Moreover, crises, whether being financial or political, also tend to increase regional correlations and linkages among MENA markets, although the impact of financial crises is higher compared to political instabilities. Analysis highlighted the positive short term impacts of regional integration on inclusion in the MENA region; however, these impacts could not be maintained for longer time periods. In contrast, international integration had negative effects on inclusion and stability that diminish over time. No linkages were found between financial inclusion and stability in the MENA region.
Authors
Samar Abdelmageed
Assistant Lecturer, Business Administration Department, Faculty of...