Government and Financial Institutional Determinants of Development in MENA Countries
Abstract
This article aims to examine the causal impact of the Arab Spring (AS) and government institutions on the finance–growth nexus. The empirical analysis is implemented for extensive firm-level panel data combined with national data covering macroeconomic and institutional factors for the period 2005–2014, starting 6 years before and continuing after the AS. Using Difference-in-Difference method, we analyze the effect of the AS. Evidence points to financial development as a strong positive contributor to growth. The analysis also indicates that the AS dampens growth. These results seem to suggest that political instability adversely affects growth; nevertheless, a well-functioning financial system is a necessary but not a sufficient condition to enhance growth. Therefore, policies aiming at improving the efficiency and the operation of institutions such as a country’s legal system, citizen’s participation in selecting government, freedom of expression, and the stage of financial development should persist over an extended period of time, in order to bear fruition and achieve a significant success in boosting economic growth and reducing poverty.
Integrity signals
Registry
Cites
Statistics
Claims the paper makes
Claims other papers make about this one
Each is checked against this paper’s own text: does it say what the citing paper says it does?
There is a bi-directional causality between financial inclusion and economic growth in different countries and regions.
“Several other researchers found a bi-directional causality between financial inclusion and economic growth in different countries and regions, indicating the complementarity of the 'demand-following' and 'supply-leading' hypotheses and encouraging regulators to follow a holistic approach while undertaking a financial reform that promotes economic developments (Chima et al. 2021; Arayssi et al. 201”
From Financial Inclusion and Economic Growth in Sub-Saharan Africa—A Panel ARDL and Granger Non-Causality Approach (2023) · cites this paper as Arayssi et al. 2019
Cites
On the mechanics of economic development
Lucas, R. E. (1988) · Journal of Monetary Economics · doi:10.1016/0304-3932(88)90168-7 · Cited by 24,085 · see citing works
Increasing returns and long-run growth
Romer, P. M. (1986) · Journal of Political Economy · doi:10.1086/261420 · Cited by 20,149 · see citing works
Estimating Standard Errors in Finance Panel Data Sets: Comparing Approaches
Petersen, M. A. (2008) · Review of Financial Studies · doi:10.1093/rfs/hhn053 · Cited by 10,804 · see citing works
Finance and Growth: Schumpeter Might Be Right
King, R. G., & Levine, R. (1993) · The Quarterly Journal of Economics · doi:10.2307/2118406 · Cited by 8,657 · see citing works
Financial Development and Economic Growth: Views and Agenda
Levine, R. E. (n.d.) · RePEc: Research Papers in Economics · Cited by 4,204 · see citing works
Long-Run Policy Analysis and Long-Run Growth
Rebelo, S. (1991) · Journal of Political Economy · doi:10.1086/261764 · Cited by 3,319 · see citing works
Robust Inference With Multiway Clustering
Cameron, A. C., Gelbach, J. B., & Miller, D. L. (2011) · Journal of Business & Economic Statistics · doi:10.1198/jbes.2010.07136 · Cited by 3,203 · see citing works
Stock Markets, Banks, and Economic GrowthPreprint
Levine, R. E., & Zervos, S. (1996) · RePEc: Research Papers in Economics · Cited by 3,155 · see citing works
Financial Development and Economic Growth: Views and Agenda
Levine, R. (1999) · Policy Research Working Papers · doi:10.1596/1813-9450-1678 · Cited by 2,977 · cited 1× · see citing works
“While Levine (1997) believes that financial intermediaries enhance economic efficiency, and ultimately growth, by helping allocate capital to its best uses, Lucas (1988) asserts that the role of the financial sector in economic growth is “overstressed”.”
BackgroundStock Markets, Banks, and Economic Growth
Levine, R., & Zervos, S. (1999) · Policy Research Working Papers · doi:10.1596/1813-9450-1690 · Cited by 2,881 · see citing works
Quality Ladders in the Theory of Growth
Grossman, G. M., & Helpman, E. (1989) · The Review of Economic Studies · doi:10.2307/2298044 · Cited by 2,545 · see citing works
Pagano, M. (1993) · European Economic Review · doi:10.1016/0014-2921(93)90051-b · Cited by 1,560 · see citing works
Financial development and economic growth
De Gregorio, J., & Guidotti, P. E. (1995) · World Development · doi:10.1016/0305-750x(94)00132-i · Cited by 1,216 · see citing works
The impact of inflation on financial sector performance
Boyd, J. H., Levine, R. E., & Smith, B. D. (2001) · Journal of Monetary Economics · doi:10.1016/s0304-3932(01)00049-6 · Cited by 1,211 · see citing works
On the economic consequences of civil war
Collier, P. (1999) · Oxford Economic Papers · doi:10.1093/oep/51.1.168 · Cited by 1,192 · see citing works
The direction of causality between financial development and economic growth
Calderon, C. A., & Liu, L. (2003) · Journal of Development Economics · doi:10.1016/s0304-3878(03)00079-8 · Cited by 1,157 · see citing works
Mankiw, N., Phelps, E. S., & Romer, P. M. (1995) · Brookings Papers on Economic Activity · doi:10.2307/2534576 · Cited by 1,053 · see citing works
Bank ownership and performance. Does politics matter?
Micco, A., Panizza, U. G., & Yañez, M. (2006) · Journal of Banking & Finance · doi:10.1016/j.jbankfin.2006.02.007 · Cited by 892 · see citing works
Financial development and economic growth: New evidence from panel data
Hassan, M. K., Sanchez, B., & Yu, J.-S. (2011) · The Quarterly Review of Economics and Finance · doi:10.1016/j.qref.2010.09.001 · Cited by 795 · see citing works
Do Democracies Have Different Public Policies than Nondemocracies?
Mulligan, C. B., Gil, R., & Sala-i-Martín, X. (2004) · The Journal of Economic Perspectives · doi:10.1257/089533004773563430 · Cited by 662 · see citing works
Terrorism and the world economy
Abadie, A., & Gardeazábal, J. (2007) · European Economic Review · doi:10.1016/j.euroecorev.2007.08.005 · Cited by 588 · see citing works
Financial inclusion and stability in MENA: Evidence from poverty and inequality
Neaime, S., & Gaysset, I. (2017) · Finance research letters · doi:10.1016/j.frl.2017.09.007 · Cited by 568 · see citing works
Kar, M., Nazlıoğlu, Ş., & Ağır, H. (2011) · Economic Modelling · doi:10.1016/j.econmod.2010.05.015 · Cited by 535 · see citing works
Economic Growth, Civil Wars, and Spatial Spillovers
MURDOCH, J. C., & SANDLER, T. (2002) · Journal of Conflict Resolution · doi:10.1177/0022002702046001006 · Cited by 534 · see citing works
Regional Effects of Terrorism on Tourism in Three Mediterranean Countries
Δράκος, Κ., & Kutan, A. M. (2003) · Journal of Conflict Resolution · doi:10.1177/0022002703258198 · Cited by 477 · see citing works
CALCULATING TRAGEDY: ASSESSING THE COSTS OF TERRORISM
Frey, B. S., Luechinger, S., & Stutzer, A. (2007) · Journal of Economic Surveys · doi:10.1111/j.1467-6419.2007.00505.x · Cited by 439 · see citing works
Economic Growth and the Balance-of-Payments Constraint.
Drakopoulos, S. A., McCombie, J. S. L., & Thirlwall, A. P. (1994) · The Economic Journal · doi:10.2307/2235469 · Cited by 430 · see citing works
Institutional development, financial deepening and economic growth: Evidence from China
Hasan, I., Wachtel, P. A., & Zhou, M. (2007) · Journal of Banking & Finance · doi:10.1016/j.jbankfin.2007.11.016 · Cited by 417 · see citing works
Dualism and Macroeconomic Volatility
Aghion, P., Banerjee, A., & Piketty, T. (1999) · The Quarterly Journal of Economics · doi:10.1162/003355399556296 · Cited by 410 · see citing works
Does Uncertainty Reduce Growth? Using Disasters as Natural Experiments
Baker, S., & Bloom, N. (2013) · National Bureau of Economic Research · doi:10.3386/w19475 · Cited by 356 · see citing works
The Buck Stops Where? The Role of Limited Liability in Economics
Noe, T. H., & Smith, S. D. (1997) · RePEc: Research Papers in Economics · Cited by 280 · see citing works
How Much Does Violence Tax Trade?
Blomberg, S. B., & Hess, G. D. (2006) · The Review of Economics and Statistics · doi:10.1162/rest.88.4.599 · Cited by 275 · see citing works
The Economics of the Arab Spring
Malik, A., & Awadallah, B. (2013) · World Development · doi:10.1016/j.worlddev.2012.12.015 · Cited by 268 · see citing works
Re-examining the financial development and economic growth nexus in Kenya
Wolde‐Rufael, Y. (2009) · Economic Modelling · doi:10.1016/j.econmod.2009.05.002 · Cited by 218 · see citing works
Financial Development and Economic Growth: Empirical Evidence from Six MENA Countries
Abu‐Bader, S., & Abu‐Qarn, A. S. (2008) · Review of Development Economics · doi:10.1111/j.1467-9361.2008.00427.x · Cited by 212 · see citing works
Development, Growth and Policy Reform in the Middle East and North Africa since 1950
Yousef, T. M. (2004) · The Journal of Economic Perspectives · doi:10.1257/0895330042162322 · Cited by 212 · see citing works
Neaime, S. (2012) · Emerging Markets Review · doi:10.1016/j.ememar.2012.01.006 · Cited by 201 · see citing works
Financial Development and Economic Growth: A Review and New Evidence
Khan, M. S. (2003) · Journal of African Economies · doi:10.1093/jae/12.suppl_2.ii89 · Cited by 200 · see citing works
Koubi, V. (2004) · Journal of Peace Research · doi:10.1177/0022343305049667 · Cited by 181 · see citing works
FINANCIAL DEVELOPMENT AND ECONOMIC GROWTH
Khan, A. (2001) · Macroeconomic Dynamics · doi:10.1017/s1365100500020046 · Cited by 165 · see citing works
War, terror, and the tourism market in Israel
Fleischer, A., & Buccola, S. T. (2002) · Applied Economics · doi:10.1080/00036840110099252 · Cited by 154 · see citing works
Non‐linear finance–growth nexus: <i>A threshold with instrumental variable approach</i><sup>1</sup>
Huang, H., & Lin, S. (2009) · Economics of Transition · doi:10.1111/j.1468-0351.2009.00360.x · Cited by 148 · cited 1× · see citing works
“…related to the well-established literature that examines the effects of financial health of the country on growth (e.g., Abu‐Bader and Abu‐Qarn 2008; Huang and Lin 2009; Levine and Zervos Notes: Arab Spring is the DID estimator which is equal to the treatment group (a dummy variable = 1 if the…”
BackgroundPolitical transition and bank performance: How important was the Arab Spring?
Ghosh, S. (2015) · Journal of Comparative Economics · doi:10.1016/j.jce.2015.02.001 · Cited by 147 · see citing works
Inflation and financial development: Evidence from Brazil
Bittencourt, M. F. (2010) · Economic Modelling · doi:10.1016/j.econmod.2010.09.021 · Cited by 147 · see citing works
Does the stock market cause economic growth? Portuguese evidence of economic regime change
Marques, L. M., Fuinhas, J. A., & Marques, A. C. (2013) · Economic Modelling · doi:10.1016/j.econmod.2013.02.015 · Cited by 131 · see citing works
Further evidence on finance-growth causality: A panel data analysis
Bangaké, C., & Eggoh, J. C. (2011) · Economic Systems · doi:10.1016/j.ecosys.2010.07.001 · Cited by 128 · see citing works
After the SpringEconomic Transitions in the Arab World
Amin, M., Assaad, R. A., al-Baharna, N., Derviş, K., Desai, R. M., Dhillon, N. S., Galal, A. J., Ghanem, H., Graham, C. L., & Kaufmann, D. (2012) · Oxford University Press eBooks · doi:10.1093/acprof:oso/9780199924929.001.0001 · Cited by 112 · see citing works
Financial crises and contagion vulnerability of MENA stock markets
Neaime, S. (2016) · Emerging Markets Review · doi:10.1016/j.ememar.2016.03.002 · Cited by 105 · see citing works
Parliamentary election cycles and the Turkish banking sector
Baum, C. F., Caglayan, M. O., & Talavera, O. (2010) · Journal of Banking & Finance · doi:10.1016/j.jbankfin.2010.05.013 · Cited by 98 · see citing works
Financial development, trade and growth triangle: the case of India
Katırcıoğlu, S., Kahyalar, N., & Benar, H. (2007) · International Journal of Social Economics · doi:10.1108/03068290710778615 · Cited by 81 · see citing works
Chapter 9 Terrorism: Theory and applications
Enders, W., & Sandler, T. M. (1995) · Handbook of defense economics · doi:10.1016/s1574-0013(05)80011-0 · Cited by 76 · see citing works
Does democracy foster financial development? An empirical analysis
Yang, B. (2011) · Economics Letters · doi:10.1016/j.econlet.2011.05.012 · Cited by 76 · see citing works
Financial development and economic growth in Ghana : is there a causal link?
Quartey, P., & Prah, F. (2008) · The African finance journal · Cited by 73 · see citing works
Poghosyan, T. (2012) · Economic Systems · doi:10.1016/j.ecosys.2012.07.003 · Cited by 73 · see citing works
Counting the Cost of the Intifada: Consumption, Saving and Political Instability in Israel
Fielding, D. (2003) · Public Choice · doi:10.1023/a:1024831518541 · Cited by 69 · see citing works
The Power of the Street: Evidence from Egypt's Arab Spring
Acemoğlu, D., Hassan, T. A., & Tahoun, A. (2014) · National Bureau of Economic Research · doi:10.3386/w20665 · Cited by 53 · see citing works
The Economics of Political Transitions
Khandelwal, P., & Roitman, A. (2013) · IMF Working Paper · doi:10.2139/ssrn.2241917 · Cited by 51 · see citing works
Davidson, P. J. (2008) · Cited by 50 · see citing works
Wiarda, H. J. (2012) · American Foreign Policy Interests · doi:10.1080/10803920.2012.686723 · Cited by 31 · see citing works
Financial development and growth
Becsi, Z., & Wang, P. (1997) · RePEc: Research Papers in Economics · Cited by 30 · see citing works
Does trade openness and financial liberalization foster growth
Awojobi, O. (2013) · International Journal of Social Economics · doi:10.1108/03068291311321848 · Cited by 21 · see citing works
Institutions and development in MENA region: evidence from the manufacturing sector
Arayssi, M., & Fakih, A. (2015) · International Journal of Social Economics · doi:10.1108/ijse-07-2014-0136 · Cited by 19 · see citing works
Self-citationMacroeconomic adjustment under regime change: From social contract to Arab Spring
Faria, J. R., & McAdam, P. (2015) · Journal of International Money and Finance · doi:10.1016/j.jimonfin.2015.04.001 · Cited by 18 · see citing works
Abosedra, S. S., & Fakih, A. (2014) · Journal of Economic Research (JER) · doi:10.17256/jer.2014.19.1.001 · Cited by 11 · see citing works
Self-citationThe effect of private investments on banks' capital requirements
Arayssi, M. (2015) · European Journal of Finance · doi:10.1080/1351847x.2015.1049283 · Cited by 6 · see citing works
Self-citationArab Countries in Transition - Economic Outlook and Key Challenges
Fund, I. M. (2015) · MF Policy Paper · doi:10.5089/9781498344128.007 · Cited by 5 · see citing works
Transparent rules for deposing central bankers
Arayssi, M. (2015) · International Review of Economics & Finance · doi:10.1016/j.iref.2015.01.005 · Cited by 1 · see citing works
Self-citation
Flagged first, then by citations
3 of the 70 references couldn’t be matched to a known paper.
Cited by
Sorted by citations
The impact of board composition on the level of ESG disclosures in GCC countries
Arayssi, M., Jizi, M. I., & Tabaja, H. H. (2019) · Sustainability Accounting Management and Policy Journal · doi:10.1108/sampj-05-2018-0136 · Cited by 485 · see citing works
Self-citationThe financial and market consequences of environmental, social and governance ratings
Aboud, A., & Diab, A. (2019) · Sustainability Accounting Management and Policy Journal · doi:10.1108/sampj-06-2018-0167 · Cited by 97 · see citing works
Ehigiamusoe, K. U., & Samsurijan, M. S. (2021) · International Journal of Finance & Economics · doi:10.1002/ijfe.2066 · Cited by 87 · see citing works
Asante, G. N., Takyi, P. O., & Mensah, G. (2023) · Development Studies Research · doi:10.1080/21665095.2022.2156904 · Cited by 72 · see citing works
“Also, the study by Arayssi, Fakih, and Kassem (2019) indicated that there is a bidirectional causality between fi nancial development and economic growth in Kenya.”
BackgroundFinancial inclusion and economic growth: What roles do institutions and financial regulation play?
Ofoeda, I., Amoah, L., Anarfo, E. B., & Abor, J. Y. (2022) · International Journal of Finance & Economics · doi:10.1002/ijfe.2709 · Cited by 71 · see citing works
Jima, M. D., & Makoni, P. L. (2023) · Journal of Risk and Financial Management · doi:10.3390/jrfm16060299 · Cited by 39 · see citing works
Damane, M., & Ho, S. (2024) · Development Studies Research · doi:10.1080/21665095.2024.2373459 · Cited by 35 · see citing works
Which journal ranking list? A case study in business and economics
Jaafar, R. H., Pereira, V. E., Saab, S. S., & El-Kassar, A.-N. (2020) · EuroMed Journal of Business · doi:10.1108/emjb-05-2020-0039 · Cited by 34 · see citing works
Moudud‐Ul‐Huq, S., Biswas, T., Halim, M. A., Mateev, M., Yousaf, I., & Abedin, M. Z. (2021) · International Journal of Islamic and Middle Eastern Finance and Management · doi:10.1108/imefm-05-2020-0214 · Cited by 25 · see citing works
Tchidi, G. E., & Zhang, W. (2024) · International Journal of Finance & Economics · doi:10.1002/ijfe.2954 · Cited by 17 · see citing works
The Role of Institutional Quality in Finance-Growth Nexus: Evidence from North African Countries
Sghaier, I. M. (2021) · Journal of the Knowledge Economy · doi:10.1007/s13132-021-00850-6 · Cited by 17 · see citing works
Skill Mismatch, Nepotism, Job Satisfaction, and Young Females in the MENA Region
Arayssi, M., Fakih, A., & Haimoun, N. (2023) · Econometrics · doi:10.3390/econometrics11020016 · Cited by 10 · see citing works
Self-citationFinancial market uncertainty and the macro economy: the role of governance and institutional quality
Abaidoo, R., & Agyapong, E. K. (2024) · EconomiA · doi:10.1108/econ-02-2023-0034 · Cited by 8 · see citing works
Determinants of Credit Risk in Ethiopian Banking Industry: Does Political Stability Matter?
Adem, M. (2022) · Global Business Review · doi:10.1177/09721509221104244 · Cited by 8 · see citing works
Haruna, H. A., Dibal, H. S., & Isichei, E. E. (2023) · Global Business Review · doi:10.1177/09721509231163712 · Cited by 6 · see citing works
Li, Z., Wang, R., Xu, Y., & Gao, Y. (2020) · IEEE Access · doi:10.1109/access.2020.2981685 · Cited by 6 · see citing works
Gıovanıs, E., & Özdamar, Ö. (2022) · Seikei ronsō/Review of economics and political science · doi:10.1108/reps-09-2020-0138 · Cited by 5 · see citing works
Democratic transition and fiscal policy in the Arab world
Bougharriou, N., Benayed, W., & Gabsi, F. B. (2022) · Economic Systems · doi:10.1016/j.ecosys.2021.100876 · Cited by 4 · see citing works
The determinants of SMEs’ internationalisation among MEDA transitional economiesPreprint
Scalamonti, F. (2025) · SSRN Electronic Journal · doi:10.2139/ssrn.5084116 · Cited by 4 · see citing works
IMF Conditionality and Government Education Spending: The Case of 10 MENA Countries
Sherry, H., & Zeaiter, H. (2024) · Economies · doi:10.3390/economies12090234 · Cited by 3 · see citing works
Assaker, G., & Shahin, W. N. (2022) · Publications · doi:10.3390/publications10040044 · Cited by 3 · see citing works
Exploring the impact and mechanisms of digital finance on regional financial development in China
Chen, H., yang, F., & Hu, Y. (2025) · Applied Economics Letters · doi:10.1080/13504851.2025.2451113 · Cited by 2 · see citing works
Institutions and the Financial Inclusion-Economic Growth Nexus in Sub-Saharan Africa
Chinoda, T., & Kapingura, F. M. (2024) · Advances in finance, accounting, and economics book series · doi:10.4018/979-8-3693-0522-5.ch010 · Cited by 2 · see citing works
Social unrest and bank liquidity creation: evidence from MENA banks
Ghosh, S. (2024) · Journal of Financial Economic Policy · doi:10.1108/jfep-09-2023-0257 · Cited by 1 · see citing works
The Institutional Approach to Financial Development: Panel Study for the MENA Region
Béji, S., & Belhadj, A. (2022) · Perspectives on development in the Middle East and North Africa (MENA) region · doi:10.1007/978-3-030-92133-0_8 · Cited by 1 · see citing works
Finance-Growth Nexus in the Framework of Democratic Construction: Empirical Evidence from Egypt
Elazhary, R. H. (2022) · المجلة العلمية للدراسات والبحوث المالية والتجارية · doi:10.21608/cfdj.2022.229769
Growth Erosion in MENAP during 2000–2018: Reasons and Remedies
Kireyev, A. (2025) · Review of Middle East Economics and Finance · doi:10.1515/rmeef-2020-0010
Peykani, P., Sargolzaei, M., Mohagheghnia, M. J., Takaloo, A., & Valimoradi, M. (2026) · PLoS ONE · doi:10.1371/journal.pone.0343259
How Business Environment Constraints Shape Firm Performance: Evidence From Global Micro-Level Data
Gıovanıs, E., & Özdamar, Ö. (2025) · Review of Economic Perspectives · doi:10.2478/revecp-2025-0008
- Authors
- Arayssi, M., Fakih, A., & Kassem, M.
- Affiliations
- Lebanese American University (LB)
- Corresponding author
- Arayssi, Mahmoud
- Venue
- Emerging Markets Finance and Trade
- Publisher
- Informa UK Limited
- Published
- 2018-08-28
- Volume
- 55
- Issue
- 11
- Pages
- 2473-2496
- ISSN
- 1061-2009 (ISSN-L)
- 1540-496X
- 1558-0938
- OpenAlex
- W2889189524
- Cited by
- 29
- References
- 70
- Citations by year
- 2026: 1 · 2025: 4 · 2024: 6 · 2023: 4 · 2022: 7 · 2021: 2 · 2020: 3 · 2019: 2
- FWCI
- 2.82
- Type
- journal article
- Language
- en
- Open access
- closed
- Locations
- Emerging Markets Finance and Trade (publishedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- Funders
- Economic Research Forum
- Topics
- Physical Sciences › Computer Science › Information Systems › Economic Growth and Development
- Social Sciences › Economics, Econometrics and Finance › General Economics, Econometrics and Finance › Monetary Policy and Economic Impact
- Social Sciences › Sociology and Political Science › Corruption and Economic Development
- Keywords
- Arab Spring, financial development, economic growth, government institutions, political instability, finance-growth nexus, Middle East and North Africa, firm-level panel data, institutional quality, poverty reduction
About these checks
Registry, retraction, Cites and statistics results are computed, not judged, with one exception: a printed reference that no index lists is read once by a model before it counts as a citation error. Claims are extracted by a model and kept only when their quote appears verbatim in the text; each cited source is then checked, with a model’s help, for whether it says what the claim relies on. Those verdicts can be wrong — read the claim’s quote and the cited source before relying on one.
Statistics and arithmetic are recomputed, not judged.
Confidence bands are shown only for fields calibrated on our annotated test set. None is calibrated yet, so no band is shown.
What counts as a claim ›How we measure confidence ›How we check this ›
Are you an author, or do you see a problem with this page? Request a review
