On Financial Development and Economic Growth in the Arab Republic of Egypt
This paper discusses the evolution of the Egyptian banking sector and the main trends in financial development in the Arab Republic of Egypt. The paper examines empirically the relationship between the development of the financial sector and econom...
| Main Authors: | , , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2019
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/706381568308016417/On-Financial-Development-and-Economic-Growth-in-the-Arab-Republic-of-Egypt http://hdl.handle.net/10986/32415 |
| Summary: | This paper discusses the evolution of
the Egyptian banking sector and the main trends in financial
development in the Arab Republic of Egypt. The paper
examines empirically the relationship between the
development of the financial sector and economic growth in
Egypt between 1980 and 2016. It draws comparisons based on
critical financial indicators between Egypt and selected
emerging markets and developing economies, using a new data
set of financial development indexes released by the
International Monetary Fund. Econometric time-series
modeling of bivariate regressions for real growth per capita
and measures of financial development, to assess the
relationship between financial development and economic
growth in Egypt, yields three specific findings. First;
there is a strong association between real growth per capita
and financial development measured. Second; access to and
the efficiency of banking services are not associated with
real per capita income. Third, the Financial Markets Access
Index—which compiles data on market capitalization outside
the top 10 largest companies and the number of corporate
issuers of debt—indicates that there is a robust association
with real per capita gross domestic product. The main policy
implications suggest that there should be a stronger focus
on promoting a more proactive role for the financial
services industry in Egypt. There is an especially critical
role for bank financing to support the private sector to
maintain an inclusive growth momentum. Further development
of the capital market will promote the sustainability of
such economic growth. |
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