The Effect of Globalization on Financial Development in the MENA Region

This paper provides new evidence that sheds light on the effect of globalization on financial development using data from 9 MENA countries over the period 1991–2007. The empirical results based on the Panel-data Vector Autoregression and Fully Modified Ordinary Least Squares methods reveal that globalization affects financial development and economic growth in the MENA region while globalization does not play any role in institutional reforms, which promote financial development and economic growth. Hence, governments can play a crucial role in improving the necessary economic conditions for the benefits of globalization to be felt in the MENA region. Also institutional reform policies can be important for policy makers who are attempting to accelerate globalization and financial development. Copyright Springer-Verlag Wien 2012