nep-ara New Economics Papers
on Arab World
Issue of 2012‒12‒22
seven papers chosen by
Quentin Wodon
World Bank

  1. An Empirical Analysis of the Risk Taking Channel of Monetary Policy in Turkey By Ekin Ayse Ozsuca; Elif Akbostanci
  2. The effects of countercyclical fiscal policy: Firm-level evidence from temporary consumption tax cuts in Turkey By Misch, Florian; Seymen, Atılım
  3. Cluster Policy as a Development Strategy. Case Studies from the Middle East and North Africa By Maximilian Benner
  4. Gender Differences in College Applications: Evidence from the Centralized System in Turkey By Saygin, Perihan Ozge
  5. Deindustrialisation and re-industrialisation in the Middle East: Reflections on the cotton industry in Egypt and western Anatolia By Laura Panza
  6. From Kuttabs to Schools:Educational Modernization, Religion, and Human Capital in Twentieth Century Egypt By Saleh, Mohamed
  7. The Political Economy of Law and Economic Development in Islamic History By Metin Cosgel

  1. By: Ekin Ayse Ozsuca (Department of Economics, METU); Elif Akbostanci (Department of Economics, METU)
    Abstract: The mechanism by which monetary policy affects financial institutions’ risk perception and/or tolerance has been called the ‘risk-taking channel’ of monetary policy. It has been recently argued that periods of low interest rates due to expansionary monetary policy, might induce an increase in bank risk-appetite and risk-taking behavior. This paper investigates the bank specific characteristics of risk-taking behavior of the Turkish banking sector as well as the existence of risk taking channel of monetary policy in Turkey. Using bank level quarterly data over the period 2002-2012 a dynamic panel model is estimated. Our sample accounts for 53 banks that have been active in Turkey during the period. To deal with the potential endogeneity between risk and bank specific characteristics, which are explanatory variables in our model, the GMM estimator proposed by Arellano and Bover (1995) and Blundell and Bond (1998) is used. Four alternative risk measures are used in the analysis; three accounting-based risk indicators and a market-based indicator- Expected Default Frequency. We find evidence that low levels of interest rates have a positive impact on banks’ risk-taking behavior for all the risk measures. Specifically, low short term interest rates reduce the risk of outstanding loans; however short term interest rates below a theoretical benchmark increase risk-taking of banks. This result holds for macroeconomic controls as well. Furthermore, in terms of bank specific characteristics, our analysis suggests that large, liquid and well-capitalized banks are less prone to risk-taking.
    Keywords: Monetary policy, Transmission mechanisms, Risk-taking channel, Turkey, Panel Data
    JEL: E44 E52 G21
    Date: 2012–12
  2. By: Misch, Florian; Seymen, Atılım
    Abstract: The paper investigates the effects of temporary consumption tax cuts using firm-level data. As part of its countercyclical measures implemented during the recent global economic crisis, Turkey temporarily lowered consumption taxes on selected durables. Using data on the change of sales of firms that benefited from this measure and of those that did not over different periods, we perform a difference-in-difference analysis where we also control for various unobservable effects including sector-specific shocks to address potential endogeneity. We find positive and robust effects of consumption tax cuts on the change of firm sales which is consistent with theoretical predictions. --
    Keywords: countercyclical fiscal policy,consumption tax cuts,firm-level data
    JEL: E32 E62 H20
    Date: 2012
  3. By: Maximilian Benner
    Abstract: Cluster policy has become a method of choice for policymakers in many countries. Promoting strong localized industries is an appealing perspective for practitioners, as it can be seen as a way to anchor economic activity in regions in an era of globalization. If cluster policy is successful, it can contribute to the creation of employment and to the initiation of growth processes in urban regions and even in some rural ones. This makes cluster policy an interesting tool for economic policy in developing countries. This article offers some theoretical considerations on the use of cluster policy and presents case studies from Saudi Arabia, Morocco, Tunisia, and Algeria.
    Keywords: economic development, economic growth, industrial policy, regional policy, development policy, cluster policy, cluster theory, Saudi Arabia, Morocco, Tunisia, Algeria
    JEL: O14 O18 O25 O30 O43 O53 O55 O57 P25 R11 R12 R38 R58
    Date: 2012–12
  4. By: Saygin, Perihan Ozge
    Abstract: In Turkey, as in many other countries, female students perform better in high school and have higher test scores than males. Nevertheless, men still predominate at highly selective programs that lead to high-paying careers. The gender gap at elite schools is particularly puzzling because college admissions are based entirely on nationwide exam scores. Using detailed administrative data from the centralized college entrance system, I study the impact of gender differences in preferences for programs and schools on the allocation of students to colleges. Controlling for test score and high school attended, I find that females are more likely to apply to lower-ranking schools, whereas males set a higher bar, revealing a higher option value for re-taking the test and applying again next year. I also find that females and males value program attributes differently, with females placing more weight on the distance from home to college, and males placing more weight on program attributes that are likely to lead to better job placements. Together, these differences in willingness to be unassigned and in relative preferences for school attributes can explain much of the gender gap at the most elite programs.
    Keywords: gender gap , college admissions , school choice
    JEL: C35 I20 I24
    Date: 2012
  5. By: Laura Panza
    Abstract: This paper undertakes an investigation of the process of decline and rebirth of textile manufacturing in two Middle Eastern regions, Egypt and western Anatolia during the first wave of globalisation (1850-1914). Through the application of the “Dutch Disease” model we explore the linkages between terms of trade and industrialisation. These are further related to the evolution of price transmission between domestic and global raw cotton markets. We find that different levels of market integration have contributed to diverging trajectories in industrial development in the two regions: while in Egypt the process of de-industrialisation was not reversed, in western Anatolia weaker international price transmission and domestic policy interventions facilitated the creation of a nascent domestic textile industry.
    Date: 2012–12
  6. By: Saleh, Mohamed (TSE,IAST)
    Abstract: I examine the impact of the transformation of elementary religious schools (kuttabs) into modern primary schools in 1953-56 on the educational and occupational differentials between religious groups in Egypt. Before the reform, non-Muslims enjoyed better educational and occupational outcomes than the Muslim majority and, unlike Muslims, were almost all enrolled in modern schools. Using several new data sources, the individual-level census sample from 1996, the official schooling reports from 1907 to 1969, and the village/urban quarter-level census data from 1897 to 1986, I find that the inter-religious educational and occupational gaps both declined in the second half of the twentieth century. The educational reform seems to explain the reduction in the occupational gap, but cannot explain the decline of the educational gap.
    Keywords: educational modernization; religious schools; Middle Eastern economic history; human capital; modern schools
    JEL: I N35
    Date: 2012–08
  7. By: Metin Cosgel (University of Connecticut)
    Abstract: There appear to be two seemingly contradictory images of law and economic change in the Islamic world. Whereas some scholars have viewed Islamic societies as rigid and incapable of adapting to a changing environment, others have held the opposite image of Islamic societies as flexible, quick to adapt to change, and conducive to economic development. Researchers have often focused on either stagnation or change as being the more representative image that needs explanation, rarely looking to explain why both images coexisted. Using a political economy approach, this paper explains the nuanced flexibility of Islamic law by focusing on the relationship between the ruler and the legal-religious community. This community has been an influential group in Islamic societies because of its power in the interpretation and adjudication of the law and its ability to confer legitimacy on the rulers. Change or stagnation has emerged as the outcome of the strategic interaction between the rulers and legal community, rather than from a fixed characteristic of Islamic societies or an intrinsic quality of a new development.
    Keywords: Islamic law, change, stagnation, technology, legal community, political economy
    JEL: D7 H2 H3 N7 O3 O5 P48 P5 Z12
    Date: 2012–12

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