THE RELATIONSHIP BETWEEN INSTITUTIONS, BANKING REGULATION AND BANKING DEVELOPMENT IN THE MENA REGION
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Authors:
• Samouel BEJI, Afiliation: University Paris-Nord (France)
• Darine YOUSSEF, Afiliation: University Paris-Nord (France) -
Keywords: Financial Development, Institutional Development, Banking Regulation, Economic Development, Dynamic Panel.
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Abstract:
The purpose of the paper is to check, on the one hand, the nature of the relationship existing between institutional development (measured by the corruption level, quality of bureaucracy, rule and law, law enforcement…), banking regulation and banking development. On the other hand, we test the relationship that exists between banking development and economic growth. We used the GMM (General Method of Moments) system on dynamic panel data for 19 countries of the MENA region, in the 2 estimations (Algeria, Bahrain, Egypt, Iran, Israel, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Saudi Arabia, Sudan, Syria, Tunisia, Turkey, United Arab Emirates, Yemen). The main results are: (i) the existence of a positive and statistically significant effect of the economic development on the banking development, (ii) banking regulation affects positively and in a significant manner, the banking development, (iii) the non existence of a significant statistically relationship between institutional quality and banking development, (iv) and finally, our findings also suggest that economic growth is enhanced by banking development. The absence of a significant relationship between institutional environment quality and banking development can be explained by the nature of the institutional indicators, which vary very slowly through time. That’s why, may be, banking development level reached by MENA region countries, cannot be explained by institutional development. We have chosen to assimilate the financial development to just banking development, given the relative importance of the banking sector, in comparison to the size and importance of the financial markets in these countries.