Stock Market Development of Middle East and North Africa (MENA) Region

Abstract: Financial markets play important roles for economic growth as they facilitate the flow of resources to the most productive investment opportunities and help in terms of efficient allocation of credit in the economy. Recognizing the important roles of stock market on economic growth, prudential international institutions such as World Bank, IMF and ADB pursued stock market development programs for emerging markets in developing nations. Hence, this study sought to investigate the determinants of development in capital markets in the MENA region from the perspective of three countries Egypt, Saudi Arabia and Tunisia. Secondary data for the ten years period of 1992-2012 were used to model the factors influencing the development of their stock markets. Using Correlation analysis it has been revealed that, macro-economic factors such as exchange rate, oil rent, income per capita, inflation, domestic savings and interest rate can be used to study development capital markets. The analysis also reported significant relationship between stock market development and some variables for some countries and irrelevant to others. The variations in results are explained by the economic and legal environment in every country and show some policy options. The findings are interesting in the sense that they provide variations of the determinants of the stock market developmen