nep-ara New Economics Papers
on Arab World
Issue of 2011‒04‒16
ten papers chosen by
Quentin Wodon
World Bank

  1. Impact of Interest Rates on Islamic and Conventional Banks: The Case of Turkey By Etem Hakan, Ergeç; Bengül Gülümser, Arslan
  2. Whither an axis shift: A perspective from Turkey's foreign trade By Mehmet, Babacan
  3. Enhancing the competitiveness of the Arab SMEs By Elasrag, hussein
  4. قياس الكفاءة الفنية لبنوك دول مجلس التعاون الخليجي By Onour, Ibrahim
  5. Bank ownership and performance in the Middle East and North Africa region By Farazi, Subika; Feyen, Erik; Rocha, Roberto
  6. Mediterranean business cycles: structure and characteristics By Fabio Canova; Alain Schlaepfer
  7. Labor Market Dynamics in Tunisia: The Issue of Youth Unemployment By Stampini, Marco; Verdier-Chouchane, Audrey
  8. Poverty, aspirations and wellbeing: afraid to aspire and unable to reach a better life – voices from Egypt By Solava Ibrahim
  9. The Economics of Rotational Grazing in the Gulf Coast Region: Costs, Returns, and Labor Considerations, Phase II By Gillespie, Jeffrey; Wyatt, Wayne; Venuto, Brad; Blouin, David; Boucher, Robert; Nipper, Weldon; Qushim, Berdikul
  10. Happiness on Tap: Piped Water Adoption in Urban Morocco By Florencia DEVOTO; Esther DUFLO; Pascaline DUPAS; William PARIENTE; Vincent PONS

  1. By: Etem Hakan, Ergeç; Bengül Gülümser, Arslan
    Abstract: Identifying the impact of the interest rates upon Islamic banks is key to understand the contribution of such institutions to the financial stability, designing monetary policies and devising a proper risk management applicable to these institutions. This article analyzes and investigates the impact of interest rate shock upon the deposits and loans held by the conventional and Islamic banks with particular reference to the period between December 2005 and July 2009 based on Vector Error Correction (VEC) methodology. It is theoretically expected that the Islamic banks, relying on interest-free banking, shall not be affected by the interest rates; however, in concurrence with the previous studies, the article finds that the Islamic banks in Turkey are visibly influenced by interest rates.
    Keywords: Interest-free banking; monetary policy
    JEL: E52 G21
    Date: 2011–01
  2. By: Mehmet, Babacan
    Abstract: Our analysis will discuss Turkey’s changing direction, if any, in terms of its trade orientation. This paper argues that Turkey’s trade sector has maintained its long-standing direction towards the major European Union (EU) member countries with only minor setbacks, while new dimensions in bilateral trade have emerged not only due to Turkey’s changing foreign policy considerations but also global economic transformations. Moreover, this paper argues that Turkey’s trade partners are subject to these changes, as the epicentre of the global economy shifts, i.e. to the East. In the first section, a brief introduction with regards to Turkey’s foreign trade under the AK Party’s administration -since 2002 will be provided. The second section will discuss the scope of regional and worldwide changes in trade patterns and analyze the recent shift in Turkey’s trade orientation in the context of Asia’s economic and political rise in early 21st century. The Third section will f
    Keywords: Foregin trade; economic policy
    JEL: F15 F59 F14
    Date: 2011–01
  3. By: Elasrag, hussein
    Abstract: Statistics show that SMEs represent 90% of total companies in the vast majority of economies worldwide and provide 40-80% of total job opportunities in addition to contributing largely to GDPs of many countries. For example, SMEs constitute more than 99%1 of all non-agricultural private enterprises in Egypt and account for nearly three-quarters of new employment generation. for Kuwait, this sector constitutes approximately 90% of the private workforce, including labor and imported an estimated 45% of the labor force, employment and national rates of less than 1%, in Lebanon, more than 95% of the total enterprises, contribute about 90% of the jobs. In the UAE , small and medium enterprises accounted about 94.3% of the economic projects in the country, and employs about 62% of the workforce and contributes around 75% of the GDP of the state. In addition, they account for 96% of the GDP in Yemen in 2005, and about 77%, 59%, 25% in Algeria, Palestine and Saudi Arabia, respectively, during the same year.It is often argued that the Governments should promote SMEs because of their greater economic benefits compared to the large firms in terms of job creation, efficiency and growth.Following are the major driving force to strengthen SMEs in the Arab countries: (1) SMEs are the important vehicle in terms of employments and poverty alleviation. SME employs a large share of the labour force in many Arab countries. (2) SMEs make significant contributions to the national economy of the country; and Can be a tool to accelerate the growth of exports. (3) SMEs foster an entrepreneurial culture and make the economy more resilient to the global fluctuations. The aim of this research is to study enhancing the competitiveness of Arab small and medium enterprises.
    Keywords: competitiveness ;Arab small and medium enterprises
    JEL: D2 E19 E6
    Date: 2011–04–01
  4. By: Onour, Ibrahim
    Abstract: The paper investigates efficiency performance of thirty six banks operating in Gulf Cooperation Council (GCC) countries during the period 2006-2008 . Our results indicate in general GCC banks showed considerable pure technical efficiency in the past three years with the year 2007 exhibit the most efficient year, as the number of pure technical efficient banks reached 33 percent of the total banks compared to 25 percent in 2008. The fall in technical efficiency in 2008 is due to simultaneous fall in pure technical efficiency and the scale efficiency. The output loss caused by scale inefficiency (fall of scale operations below optimum level) in 2008 is estimated 16 percent compared to 5 percent in 2007. Our results also indicate scale efficiency is inversely related to banks' size implying a major source of scale inefficiency in GCC banks is due to sub-optimal size of operations. It is also indicated in the paper that scale efficiency is inversely related to risk, implying effective risk management policies may also enhance scale efficiency.
    Keywords: الكفاءة الفنية; كفاءة الحجم
    JEL: C44 C02 C61
    Date: 2011–03–20
  5. By: Farazi, Subika; Feyen, Erik; Rocha, Roberto
    Abstract: Although both domestic and foreign private banks have gained ground in MENA in recent years, state banks continue to play an important role in many countries. Using a MENA bank-level panel dataset for the period 2001-08, the paper contributes to the empirical literature by documenting recent ownership trends and assessing the role of ownership and bank performance in MENA while accounting for key bank characteristics such as size and balance sheet composition. The paper analyzes headline performance indicators as well as their key drivers and finds that state banks exhibit significantly weaker performance, despite their larger size. This result is mainly driven by a larger holding of government securities, higher costs due to larger staffing numbers, and larger loan loss provisions reflecting weaker asset quality. The results reflect both operational inefficiencies and policy mandates. The paper also provides a detailed performance analysis of foreign and listed banks. Foreign banks are fairly new in MENA, yet perform on par with domestic banks despite their smaller size and higher investment costs. Listed banks exhibit superior performance driven by higher interest margins even in the face of higher costs associated with listing. Taken together, the results do not reject the development role for state banks, but do show that their intervention comes at a cost. As such, there is scope to reduce the share of state banks in some countries and to clarify the mandates, improve the governance, and strengthen the operational efficiency of most state banks in MENA.
    Keywords: Banks&Banking Reform,Access to Finance,Debt Markets,Corporate Law,Bankruptcy and Resolution of Financial Distress
    Date: 2011–04–01
  6. By: Fabio Canova; Alain Schlaepfer
    Abstract: We date turning points of the reference cycle for 19 countries in the Mediterranean, for selected regions, and for the area. Cycles phases are asymmetric, with expansions lasting, on average, much longer than recessions. Cyclical fluctuations are volatile and not highly correlated across countries. Recessions are not very deep and output losses limited. Heterogeneities across countries and regions are substantial. There are time variations in features of Mediterranean business cycles not clearly linked with the Euro-Mediterranean partnership process. The concordance of cyclical fluctuations in the region is poorly linked to trade as is its evolution over time.
    Keywords: Turning point dates, Reference cycle, Euro Mediterranean partnership, Trade interdependences
    JEL: E32 C32
    Date: 2011–02
  7. By: Stampini, Marco (African Development Bank); Verdier-Chouchane, Audrey (African Development Bank)
    Abstract: This paper analyzes the dynamics of the youth labor market in Tunisia using unique labor force survey data from 2005 to 2007 that include a longitudinal component. It first shows that sustained economic growth will reduce youth unemployment over the next few years. Second, forecasts indicate that the growth of private sector services has the highest potential to reduce youth unemployment. Third, the analysis of labor market characteristics reveals that young graduates experience long unemployment as they cue for high-skill jobs. Moreover, the public sector remains the main provider of employment opportunities for many graduates, in particular for women.
    Keywords: labor market, unemployment, youth, Tunisia
    JEL: J21 J64 J68 J71
    Date: 2011–03
  8. By: Solava Ibrahim
    Abstract: Poverty is usually associated with powerlessness, vulnerability and above all failure of aspirations. Poor people might not be able to achieve their capabilities, but this does not mean that they do not have aspirations they wish to fulfil. The concept of aspirations has been explored in the fields of economics, anthropology, psychology and philosophy, but not extensively in development studies. The aim of the paper is to present a conceptual framework for analysing aspirations based on the capability approach and to apply a new methodology to articulate these aspirations. Using Egypt as a case study, the voices of the poor reveal the interrelationships between failure of aspirations, which not only leads to a downward spiral, but also to an intergenerational transfer of aspirations’ failure. The paper concludes that identifying and addressing the causal relationship between poverty, aspirations and wellbeing could be the starting point for effective and more relevant development policies that help poor people to achieve their aspired but unfulfilled capabilities.
    Date: 2011
  9. By: Gillespie, Jeffrey; Wyatt, Wayne; Venuto, Brad; Blouin, David; Boucher, Robert; Nipper, Weldon; Qushim, Berdikul
    Abstract: Profitability and labor associated with rotational grazing at three stocking rates and continuous grazing at a medium stocking rate are compared. On a per-acre basis, profits are lowest for low stocking rate rotational grazing. Labor is greatest on both per-acre and per-cow bases with high stocking rate rotational grazing.
    Keywords: Time and Motion Study, Conservation, Louisiana, Cow-Calf, Farm Management, Production Economics, Q16,
    Date: 2011
  10. By: Florencia DEVOTO (Paris School of Economics and J-PAL); Esther DUFLO (MIT and NBER); Pascaline DUPAS (UCLA and NBER); William PARIENTE (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES)); Vincent PONS (MIT (Massachusetts Institute of Technology))
    Abstract: We study the demand for household water connections in urban Morocco, and the effect of such connections on household welfare. In the northern city of Tangiers, among homeowners without a private connection to the city’s water grid, a random subset was offered a simplified procedure to purchase a household connection on credit (at a zero percent interest rate). Take-up was high, at 69%. Because all households in our sample had access to the water grid through free public taps (often located fairly close to their homes), household connections did not lead to any improvement in the quality of the water households consumed; and despite significant increase in the quantity of water consumed, we find no change in the incidence of waterborne illnesses. Nevertheless, we find that households are willing to pay a substantial amount of money to have a private tap at home. Being connected generates important time gains, which are used for leisure and social activities, rather than productive activities. Because water is often a source of tension between households, household connections improve social integration and reduce conflict. Overall, within 6 months, self-reported well-being improved substantially among households in the treatment group, despite the financial cost of the connection. Our results suggest that facilitating access to credit for households to finance lump sum quality-of-life investments can significantly increase welfare, even if those investments do not result in income or health gains.
    Date: 2011–04–01

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