The Impact of Financing from Capital Market on GDP Growth: The Case Study of MENA Region

Document Type : Original Article

Authors

1 Associate Professor of Economics, Faculty of Economics and Political Science, Shahid Beheshti University, Tehran, Iran

2 MA in Economics, Faculty of Economics and Political Science, Shahid Beheshti University, Tehran, Iran

Abstract

This paper analyzes the impact of capital market financing on economic growth in 15 selected countries from the MENA region—namely Iran, Bahrain, Egypt, Jordan, the Occupied Palestinian Territories, Saudi Arabia, the United Arab Emirates, Kuwait, Lebanon, Malta, Morocco, Oman, Qatar, Tunisia, and Turkey during 1990-2022. The analysis employs panel data models, specifically estimating via the Generalized Method of Moments and Generalized Least Squares techniques. The findings of the study indicate a positive and statistically significant effect of capital market financing on economic growth. The results also suggest that the development of capital markets (both primary and secondary markets) plays a crucial role in accelerating economic growth. However, it was observed that in countries with high dependency on oil revenues, the impact of capital market financing on economic growth is comparatively weaker. Furthermore, the development of capital markets in both oil-exporting and non-oil exporting countries enhances the role of capital market financing and amplifies its positive impact on economic growth. The findings demonstrate that strengthening capital markets can contribute to improved economic growth within the selected countries.

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References

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