Financial Development - Economic Growth Nexus:selected Mena Countries

This paper explores the finance-growth nexus in eleven Middle East and North Africa countries, using dynamic panel estimation techniques (DOLS and FMOLS) and panel causality test during the period 1980 -2012, also using principal component analysis to build financial development index. The results showed that the relationship between financial deepening and growth is bi-directional in MENA countries: financial development granger – causes growth and growth granger – causes financial development.