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What Drives Stock Market Development in the Middle East and Central Asia—Institutions, Remittances, or Natural Resources?

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  • Mr. Andreas Billmeier
  • Miss Isabella Massa

Abstract

In this paper, we assess the macroeconomic determinants of stock market capitalization in a panel of 17 countries in the Middle East and Central Asia, including both hydrocarbon-rich countries and economies without sizeable natural resource wealth. In addition to traditional variables, we include an institutional variable and remittances among the regressors. We find that (i) both institutions and remittances have a positive and significant impact on market capitalization; and (ii) both regressors matter, especially in countries without significant hydrocarbon sectors; whereas (iii) in resource-rich countries, stock market capitalization is mainly driven by the oil price.

Suggested Citation

  • Mr. Andreas Billmeier & Miss Isabella Massa, 2007. "What Drives Stock Market Development in the Middle East and Central Asia—Institutions, Remittances, or Natural Resources?," IMF Working Papers 2007/157, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2007/157
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    8. Hassan, Enas A., 2018. "The role of stock exchange efficiency in earnings quality: Evidence from the MENA region," Research in International Business and Finance, Elsevier, vol. 44(C), pages 285-296.
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    11. Ziesemer, Thomas H.W., 2012. "Worker remittances, migration, accumulation and growth in poor developing countries: Survey and analysis of direct and indirect effects," Economic Modelling, Elsevier, vol. 29(2), pages 103-118.
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    15. Al-Mashat Rania & Billmeier Andreas, 2012. "Push or Pull? The Determinants of Remittances to Egypt," Review of Middle East Economics and Finance, De Gruyter, vol. 8(2), pages 1-27, October.
    16. Kamal, Mona, 2013. "Financial Development and Economic Growth in Egypt: A Re-investigation," MPRA Paper 48564, University Library of Munich, Germany.
    17. Yilmaz Bayar, 2017. "Public Governance And Financial Development In Central And Eastern European Countries," Ekonomske ideje i praksa, Faculty of Economics and Business, University of Belgrade, issue 24, pages 53-65, March.
    18. BAYAR, Yılmaz, 2016. "Macroeconomic Determinants Of Stock Market Development: Evidence From Borsa Istanbul," Studii Financiare (Financial Studies), Centre of Financial and Monetary Research "Victor Slavescu", vol. 20(1), pages 69-89.
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    20. Devinaga RASIAH & Tay Lee YING & Sakiru Adebola SOLARIN, 2016. "Economic freedom index and stock returns in Malaysia," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(1(606), S), pages 213-236, Spring.

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