Conference Paper
Regional and International Financial Integrations: The Drivers and Collateral Benefits
No.
ERF30_73
Publisher
ERF
Date
March, 2024
This paper investigates the drivers and collateral benefits of international (and regional financial integrations ( in Middle East and North Africa economies (MENA). To this end, we first construct a quantity-based measure of RFI in the MENA. We find that IFI is mainly driven by financial development, trade openness and favorable global financial conditions. RFI, on the other hand, is mainly determined by real income per capita and trade openness. Then, we focus on whether IFI and RFI lead to collateral benefits including financial development and governance. Our results suggest that too much IFI deters whilst high er levels of RFI promote financial development. High levels of IFI and RFI both tend to be positively associated with institutional quality and governance. The empirical findings in this paper propose that MENA economies should engage in structural reforms, encompassing multilateral trade agreements liberalization of capital accounts, eliminating barriers to regional financial integration, and enhancing the institutional environment. In this vein, policymakers may be suggested to formulate strategies with the goal of maximizing the collateral benefits of both international and regional financial integrations.
Authors
Erdal Özmen
Professor of Economics, Middle East Technical University
Authors
Fatma Taşdemir
Faculty Member, Department of International Trade and...