مجلة ميلاف للبحوث والدراسات
Volume 11, Numéro 1, Pages 300-308
2025-06-30
Exploring The Finance–growth Nexus In Mena: A Dynamic Panel Approach With Institutional And Macroeconomic Variables
Authors : Soltani Hassen .
Abstract
The relationship between financial development and economic growth remains a central theme in contemporary economic research, particularly within developing regions. While several empirical studies highlight the role of the financial system as a driver of growth, others emphasize the risks posed by macroeconomic instability, including inflation. This study investigates the link between financial development, inflation, and economic growth using updated data from MENA countries spanning the period 1995 to 2024. Applying the dynamic panel GMM method, we find a robust and statistically significant positive relationship between financial development "measured through banking credit expansion and financial market capitalization" and economic growth. Furthermore, the analysis reveals that inflation exerts a negative influence on growth, potentially offsetting the benefits of financial development when price instability persists. Over time, the interaction between financial development and inflation has become more pronounced, reflecting the importance of a stable macroeconomic environment for the effectiveness of financial systems. These findings suggest that policymakers in the MENA region must simultaneously promote financial sector reforms and implement sound monetary policies to ensure sustained and inclusive economic growth.
Keywords
financial development ; inflation ; banks ; financial markets ; economic growth ; MENA ; GMM ; dynamic panel
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