IMPACT OF FINANCIAL DEVELOPMENT ON ECONOMIC GROWTH IN MENA COUNTRIES

Abstract

Financial development and economic growth are closely related terms and define each other. With more countries getting involved and clubbing their investments and money together allowing foreign trade and open market, many financial analysts have come to the point that there is a definite link between the financial development and the economic growth on a macro level. Financial development (both stock market and banking sector) is crucial to channelize savings into investment, thereby leading to economic growth but its impact changes across countries. Some financial analysts say the financial development is impact on economic growth. This study empirically examines the relationship between financial development and economic growth in MENA countries and the impact of financial development on economic growth in MENA countries over the period 2000-2015. The considered 14 MENA countries in this study are Bahrain, Egypt, Iran, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Saudi Arabia, Sudan, Tunisia, and UAE. The methodology used is quantitative thus presenting the numerical analysis for this research. The statistical method used to analyse numerical data is the ordinary least squares (OLS) thereby showing some important results as each country in the MENA had a different answer in defining the relationship. The obtained results show different significant relationship between GDP growth and financial development for each country.