nep-ara New Economics Papers
on MENA - Middle East and North Africa
Issue of 2021‒04‒05
nineteen papers chosen by
Paul Makdissi
Université d’Ottawa

  1. Geographical Exposure to Conflicts and Firm Performance: Evidence from The MENA Region By Daniel Mirza; Rita Der Sarkisian; Chahir Zaki
  2. The Determinants of Defense Spending in the Gulf Region: Evidence from Seemingly Unrelated Regressions By A. Talha Yalta; A. Yasemin Yalta
  3. Exchange Rate Pass-Through to Consumer Prices in Turkey: Nonparametric Kernel Estimation Evidence By Yilmaz, Nejat; Yucel, Eray
  4. Measuring the Economic Cost of Conflict in Afflicted Arab Countries By Elif Semra Ceylan; Semih Tumen
  5. The Relationship Between Work Pressures and Audit Performance in Tunisia By Akrimi, Nesrine
  6. Immigration and Inter-Regional Job Mobility: Evidence from Syrian Refugees in Turkey By Yusuf Emre Akgündüz; Altan Aldan; Yusuf Kenan Bagir
  7. A Novel Supply-Side Input-Output Approach for A Quick Measurement and Decomposition of the Economywide Effects of Sectoral Shutdowns Against Covid-19 and an Application to the Turkish Economy By Serdar Sayan; Ayla Alkan
  8. Personal Characteristics and Intention for Entrepreneurship By Yalcintas, Murat; Iyigun, Oykü; Karabulut, Gokhan
  9. The Impact of Family Control and Internal Governance Mechanisms on Dividend Policy: The Case of Companies Listed on the Moroccan Stock Market By Adil El Mallouky; Khalid Elouafa
  10. Diffuse interest groups and regulatory policy change: Financial consumer protection in Turkey By Coban, Mehmet Kerem
  11. The Impact of Cash Transfers on Syrian Refugee Children in Lebanon By Wael Moussa; Alexandra Irani; Nisreen Salti; Rima Al Mokdad; Zeina Jamaluddine; Jad Chaaban; Hala Ghattas
  12. Do Social Transfers Benefit Local Economic Development? The Case of Cash-for-Work Programmes in Jordan By Markus Loewe; Tina Zintl
  13. Developing Countries’ Access to International Capital Markets: What Constraint MENA? By Shereen Attia
  14. Examining Awareness level of Islamic Finance among Customers of Banks in Algeria - Exploratory Study By Bouarar, Ahmed Chemseddine; Mouloudj, kamel
  15. Does the Legal Form Matter for Firm Performance in the MENA Region? By Issam Abdo Ahmad; Ali Fakih
  16. Compliance forces, domestic policy process, and international regulatory standards: Compliance with Basel III By Coban, Mehmet Kerem
  17. The Future of the Petrochemicals Industry and Sino-Saudi Cooperation By KAPSARC, King Abdullah Petroleum Studies and Research Center
  18. Neoliberalism vs Islam, An analysis of Social Cost in case of USA and Saudi Arabia By Hayat, Azmat; Muhammad Shafiai, Muhammad Hakimi; Haron, Sabri
  19. Oil and Mortality By Sanginabadi, Bahram

  1. By: Daniel Mirza (University of Tours); Rita Der Sarkisian (Ecole des Ingénieurs de la Ville de Paris (EIVP)); Chahir Zaki (Cairo University)
    Abstract: This paper assesses the impact of insecurity generated by conflicts on firm performance in the Middle East and North Africa (MENA) region. It contributes to the literature in three ways. First, we try to identify the local effect of conflicts using a geospatial approach where we evaluate the exposure of each firm and its shipment routes and infrastructures to conflictual events overtime in a specific location. Second, from a methodological perspective, we adopt a simple methodology – new to the literature- to identify the within-firm effect. To do so, we use two series of information on performance (measured by sales and labor productivity) on the current year t and year t-2, both being reported in the same World Bank Enterprise Survey (WBES) conducted for a country in year t. Third, large datasets from the WBES for six non-oil countries (Egypt, Jordan, Lebanon, Palestine, Tunisia and Morocco) were merged with geospatial measures to conflicts. Key findings show that battles and explosions negatively and robustly affect sales and productivity, all the more so for small and mid-sized firms. Nevertheless, we do not find robust effects of exposure to protests, riots and violence against civilians across different measures of the performance of firms and conclude for further research on these issues.
    Date: 2021–02–20
  2. By: A. Talha Yalta (TOBB University of Economics and Technology); A. Yasemin Yalta (Hacettepe University)
    Abstract: We examine the determinants of demand for military expenditures in the Gulf Region (Saudi Arabia, Iran, Iraq, Kuwait, Bahrain, Qatar, UAE, and Oman) by using a partial adjustment model in a panel setting estimated with the seemingly unrelated regressions (SUR) approach. Our model takes into consideration institutional inertia as well as intercountry correlations, both observed and unobserved. In addition to economic variables, we also consider a series of strategic variables to shed light on issues such as free riding and spill in effects. Our findings based on annual data between 1980 and 2016 indicate that military expenditures are influenced by both economic and strategic factors with a high degree of heterogeneity across different countries. While some countries respond more to economic factors, others exhibit more sensitivity to strategic factors.
    Date: 2021–01–20
  3. By: Yilmaz, Nejat; Yucel, Eray
    Abstract: Exchange rate pass-through (ERPT) in the Turkish economy appeared again, especially after mid-2018 when policies to re-balance and soft-land the economy failed to a wide extent. Such re-appearance of the feedback from exchange rates to domestic prices deserves investigative efforts, having recalled that part of the stabilization success of the Central Bank of Turkey in early 2000s directly stemmed from its ability to reduce ERPT. In this paper, we aim to contribute to current policy discussions on Turkey by presenting our nonparametric kernel-based density function and regression estimates of the pass-through effect. Our findings are indicative not only of a sizable level of ERPT but also of its dependence on the size of currency depreciation.
    Keywords: Exchange Rate; Currency Depreciation; Pass-through to Inflation; Consumer Prices; Monetary Policy; Inflation Targeting; Central Bank Performance
    JEL: C51 E52 E58
    Date: 2021–02–08
  4. By: Elif Semra Ceylan (Ernst & Young); Semih Tumen (TED University)
    Abstract: The goal of this paper is to estimate the economic cost of conflict in selected Arab countries by using satellite images and geographical information systems (GIS) methods. Specifically, we employ image-processing techniques to generate data proxying intensity of economic activity at country and sub-region levels. The focus is on four countries: Iraq, Libya, Syria, and Yemen. These are the countries that have been most severely affected in various ways by the widespread wave of civil conflict occurred in the MENA region in the aftermath of the Arab Spring. Certain back-of-the-envelope calculations suggest that GDP and main factors of production are nearly halved in those countries. We use data provided by the National Geophysical Data Center of the United States to compare the night-light intensities before and after the conflict in those four countries. The night-light data serve as a proxy for regional economic activity and are widely used to generate credible economic data—mainly in circumstances where official data either do not exist or are not reliable. We construct indices combining the contrast and dispersion of night-lights within fine-grained geographical regions and then report the time series evolution of those indices both at country and sub-region levels. The estimates suggest that the scale and intensity of economic destruction in the region have been unprecedented in recent history and the extent of destruction is the largest in Syria and Yemen among those four conflict-afflicted countries. We also provide additional insights at sub-region level.
    Date: 2021–02–20
  5. By: Akrimi, Nesrine
    Abstract: The purpose of this paper is to examine the impact of auditor`s job pressures on audit performance. Using a sample of Tunisian listed companies and their signature auditors from 2013 to 2018, we demonstrate that job pressures does not impair audit performance in Tunisia.
    Date: 2021–03–16
  6. By: Yusuf Emre Akgündüz (Sabanci University); Altan Aldan (Central Bank of the Republic of Turkey); Yusuf Kenan Bagir (Central Bank of the Republic of Turkey)
    Abstract: We analyze the relationship between large-scale refugee inflows and the inter-regional job mobility of natives. Using a sudden inflow of Syrian refugees into Turkey, we identify the province level impact of hosting refugees on inward and outward job mobility of provinces using administrative social security data. We find that after the arrival of Syrian refugees, net job mobility towards hosting provinces declined. The negative effect is driven by a decline in inward mobility rather than an increase in outward mobility. A percentage point increase in Syrian to native population ratio decreases job mobility to a province by 2%. We find no corresponding effect on total internal migration, suggesting that the effect on job movers in the private sector can differ from the effect on the population at large.
    Date: 2021–02–20
  7. By: Serdar Sayan (TOBB University of Economics and Technology); Ayla Alkan (Beykent University)
    Abstract: This paper describes a novel approach proposed for use in the assessment of economywide costs of sectoral shutdowns introduced to curb the spread of Covid-19. Based on a supply-driven input-output (IO) model, our methodological framework allows for a decomposition of the total impact of sectoral shutdowns into i) losses in sectoral outputs resulting directly from the idling of factors of production employed in the sectors ordered to shut down, and indirectly from broken input-output linkages due to ii) interruption of the delivery of inputs from the sectors that have been shut down to others, and iii) suspension of input purchases by these sectors from others. We demonstrate the use of proposed methodology to measure and decompose the effects of first round of shutdown orders that the Turkish government ordered for a number of service sectors over the period between March and June 2020 as part of the fight against the Covid-19 outbreak. We employ data from the most recent input-output table for Turkey, and carry out four simulation experiments. Our findings revealed that the upper bound for the cost of shutting down five sectors considered in the study could go as high as 7.2 percent of total gross output on an annual basis, exceeding 13 billion dollars in lost output and factor incomes.
    Date: 2021–02–20
  8. By: Yalcintas, Murat; Iyigun, Oykü; Karabulut, Gokhan
    Abstract: This study analyzes the relationship between entrepreneurship intention and personal characteristics and skills by using the surveys we conducted in Turkey on 1465 senior university students. We use a modified version of the Entrepreneurial Orientation (EO) scale and the Political Skills Inventory to measure some personal characteristics and skills. We also use the nine sub-dimensions of these two scales. Probit model and wavelet coherence analysis results show that proactivity, entrepreneurship, and networking sub-dimensions of the scales are related to entrepreneurship intention. We also find that gender, the number of siblings, the grade point average (GPA) of the students, their family's education level, the parent' ownership of an enterprise, and the number of non-governmental organizations (NGO) that they are a member of are also related to entrepreneurship intention. Results may be useful to understand and enhance entrepreneurship potential.
    Keywords: Entrepreneurship,Self-employment entry,Occupational choice
    JEL: C90 D63
    Date: 2021
  9. By: Adil El Mallouky (INREDD - Innovation, Responsabilités et Développement Durable - UCA - Université Cadi Ayyad [Marrakech]); Khalid Elouafa (INREDD - Innovation, Responsabilités et Développement Durable - UCA - Université Cadi Ayyad [Marrakech])
    Abstract: The purpose of this work is to examine the determinants of the dividend distribution policy, more particularly we will highlight the effect of the involvement of family shareholders in the company and the internal governance mechanisms on the dividend payment decisions of companies listed on the Moroccan stock exchange. To answer our research questions, we used a TOBIT model estimate based on a sample of 160 observations per year-listed company over the period 2015-2018. The results of this study indicate anegative relationship between family ownership and the dividend payout ratio. In addition, the presence of a family CEO has a negative effect on the level of dividenddistributed. In contrast,we note that the use of control mechanisms by pyramid structures does not have a significant impact on dividend distribution. In terms of the effect of the characteristics of governance mechanisms on dividend payments, we find a positive association between the presence of a second institutional block holder and dividend distribution. We also find a negative relationship between the duality of the board of directors and the distribution of dividends, while the presence of independent directors on the boardof directors has no significant impact on the distribution ofdividends.
    Abstract: El objetivo de este trabajo es examinar los determinantes de la política de distribución de dividendos, más concretamente destacaremos el efecto de la implicación de los accionistas familiares y los mecanismos de gobierno interno en las decisiones de pago dividendos de empresas cotizadas en la Bolsa de Marruecos. Para responder a nuestras preguntas de investigación, utilizamos una estimación utilizando un modelo TOBIT en una muestra compuesta por 160 observaciones de años de empresa durante el período 2015-2018. Los resultados de este estudio muestran una relación negativa entre la propiedad de la vivienda y la proporción de pago de dividendos. Además, la presencia de un CEO familiar tiene un efecto negativo en el nivel de dividendos distribuidos. Además, encontramos que el uso de mecanismos de control a través de estructuras piramidales no tiene un impacto significativo en la distribución de dividendos. En cuanto al efecto de los mecanismos de gobernanza en el pago de dividendos, encontramos una asociación positiva entre la presencia de un segundo tenedor de bloque institucional y la distribución de dividendos. También revelamos una relación negativa entre la dualidad del directorio y la distribución de dividendos, además la presencia de directores independientes en el directorio no tiene un impacto significativo en la distribución de dividendos.
    Abstract: L'objectif de ce travail est d'examiner les déterminants de la politique de distributions de dividendes, plus particulièrement nous allons mettre en exergue l'effet de l'implication de l'actionnariat familial et les mécanismes internes de gouvernance sur les décisions de paiement de dividendes des sociétés cotées en bourse au Maroc. Pour répondre à nos questions de recherche nous avons utilisé une estimation à l'aide d'un modèle TOBIT portant sur échantillon composé 160 observations années-entreprises durant la période 2015-2018. Les résultats de cette étude montrent une relation négative entre la propriété familiale et le ratio de distribution de dividendes. En outre, la présence d'un PDG familial à un effet négatif sur le niveau de dividendes distribués. Par ailleurs, nous constatons que le recours à des mécanismes de contrôle par des structures pyramidales n'a pas d'impact significatif sur la distribution de dividendes. En termes de l'effet des mécanismes de gouvernance sur les paiements de dividendes, nous trouvons une association positive entre la présence d'un second détenteur de bloc institutionnel et la distribution de dividendes. On révèle également une relation négative entre la dualité du conseil d'administration et la distribution de dividendes, par ailleurs la présence des administrateurs indépendants au sein du conseil d'administration n'a pas d'impact significatif sur la distribution de dividendes.
    Keywords: conflits d’agence.,mécanismes de gouvernance,implication de l’actionnariat familial,politique de distribution de dividendes,agency conflicts,corporate governance mechanisms,involvement of family shareholders,dividend policy
    Date: 2020
  10. By: Coban, Mehmet Kerem
    Abstract: This article examines why and how a regulation on retail banking fees, commissions, and charges emerged in Turkey after a long period of regulatory forbearance. The article shows that when regulatory forbearance caused stasis, and the “statist”, exclusionary policymaking context limited consumer groups’ access to the policymaking process, consumer groups challenged the policy regime of the banking sector and the regulator by appealing to another state actor, the Ministry of Customs and Trade. The Ministry took advantage of an opportunity structure to pass a new consumer protection law which assigned a de facto mandate on the regulatory agency to regulate fees, commissions, and charges. The article argues that the regulatory policy change was a product of a policy regime change with the Ministry emerging as a veto player, as it redefined the institutional arrangements in the policymaking process, and imposed its preferences and its stricter policy approach. As such, the article contributes to our understanding of the conditions of how diffuse interest groups can trigger regulatory policy change, but more importantly policy regime change.
    Date: 2020–03–18
  11. By: Wael Moussa (FHI 360); Alexandra Irani; Nisreen Salti; Rima Al Mokdad; Zeina Jamaluddine; Jad Chaaban; Hala Ghattas
    Abstract: This paper evaluates the impact of multi-purpose cash assistance on Syrian refugee children living in Lebanon. Using a sharp multidimensional regression discontinuity design, we estimate the program impact of varying cash assistance durations measured over two waves of household survey data collected in 2019. The novel research design enables us to make pairwise comparisons between children from discontinued recipient households (received cash for 12 months then got discontinued in the next cash cycle), short-run cash recipient households (up to 10 months), longterm recipient households (between 16 and 22 months) and non-beneficiary eligible households. Results show that children of any MPC recipient group are transitioning from non-formal to formal schooling while also shifting away from child labor. Cash transfers improve health outcomes for pre-primary and school-aged children and reduce the likelihood of early marriage for girls aged 15-19 years
    Date: 2021–02–20
  12. By: Markus Loewe (Deutsches Institut für Entwicklungspolitik); Tina Zintl (Deutsches Institut für Entwicklungspolitik)
    Abstract: This article investigates what effects cash-for-work (CfW) can have on local economic development (LED). It is based on the hypothesis that CfW, which is targeted provision of jobs to vulnerable households, affects LED directly (through employment and income for workers and the creation of public goods) but also indirectly (through multiplier and investment effects as well as better social cohesion). The article builds on quantitative and qualitative research conducted in Jordan in 2019, Jordan being a particularly interesting case for the topic: Here, different foreign donors have set up a whole bunch of different CfW programmes after 2016 to support Syrian refugees along with vulnerable Jordanians. The results confirm that CfW has an indirect impact on LED through multiplier effects since CfW participants spend most of their income locally. In addition, CfW programmes in Jordan improve the skills and employability of their participants. This upgrading does not transform into higher employment rates, however, because the Jordanian labour market is extremely tight. Finally, the programmes empower women; they open new doors to the labour market and contribute to a – however not irrevocable – change of traditional gender roles. Our suggestion is thus that other refugee host countries set up CfW programmes as well, covering both refugees and low-income nationals.
    Date: 2021–03–20
  13. By: Shereen Attia (Independent Researcher)
    Abstract: The paper investigates at first factors that affect developing countries access to international capital markets. Then, we investigate whether MENA countries have different determinants compared to other developing regions for a subsample of countries in the MENA region. The objective is to explore why MENA has been unsuccessful in securing for itself a significant share of financial flows proportional to its size and the limited ability to tap the international capital markets more frequently relying heavily on other sources of finance. Our findings indicate strongly significant for country-specific variables such as GDP (proxy for size) and debt levels. The findings show that trade openness and GDP per capita, which measures links of a given country with the world and vulnerability, respectively, have a different impact on MENA. While, we find that external factors have no significant impact on private capital inflows into MENA. This imply that MENA is different in the sense that domestic policies affect financial inflows into region and not the external factors. This lend evidence to the importance of domestic policies as an important determinant of MENA’s access into international capital market. The findings also show that a decline to country risk characteristics would decrease inflows which lends evidence to the importance of institutional quality and country creditworthiness as an important determinant of market access.
    Date: 2021–03–20
  14. By: Bouarar, Ahmed Chemseddine; Mouloudj, kamel
    Abstract: The low level of awareness about Islamic finance (IF) can be one of the most important obstacles facing the development of Islamic finance. So, the purpose of this research is to examine the level of awareness about Islamic finance (Awareness of fundamental terminologies; basic rules and principles; products and services) among customers of banks in Algeria. Data were collected from 68 respondents based upon convenience sampling that was analyzed through SPSS version 16. The findings revealed that there are low levels of awareness of fundamental terminologies of Islamic financing. Further, results showed that respondents had little awareness of the Islamic finance products and services. on the other hand, the research found that there is a high level of awareness of basic rules and principles of Islamic financing. The research has some theoretical and practical implications for researchers, practitioners and policy makers.
    Keywords: Awareness; Islamic economics; Mudarabah; Musharakah; Ijara.
    JEL: G2 M31
    Date: 2020–02–26
  15. By: Issam Abdo Ahmad; Ali Fakih
    Abstract: This paper attempts to study the relationship between firm legal form and firm performance in the Middle East and North Africa Region (MENA) using the World Bank Enterprise Survey (WBES) database. Our analysis shows that open shareholding, closed shareholding, partnership, and limited partnership companies demonstrate an advantage in terms of annual sales and annual productivity growth rates over sole proprietorship firms, and that medium-sized and large-sized firms also demonstrate an advantage over small ones. Our analysis also shows that foreign ownership, exporting activities, the usage of the web in communication with clients and suppliers, and the presence of full-time workers positively affect firm performance. These findings are robust when running the analysis for firms with female participation in ownership. This paper provides directions for strategists targeting at improving the performance of firms.
    Keywords: Legal Form,Firm Performance,MENA Region,
    JEL: C10 G30 L25
    Date: 2021–03–30
  16. By: Coban, Mehmet Kerem
    Abstract: This article contributes to our understanding of how and why developing countries would comply with international banking regulatory standards, Basel standards. The article demonstrates the interplay between opportunity structures constituted by transnationalization of public policymaking and domestic institutional setting, and how forces of compliance resonate in the domestic politics of compliance. The empirical findings are based on Turkey’s compliance with Basel standards. It relies on fieldwork that involves semi-structured qualitative interviews with senior regulators and bankers, which are complemented with analysis of secondary data. The article shows that a capable and willing regulator could capitalize on the top-down policymaking style which restricts the regulatee’s access to international negotiations, and sets the terms at the domestic level. Direct access to international negotiations, resource asymmetry in favor of the regulator, and superior “negotiation knowledge” helped the regulator pacify a critical, sceptical regulatee, and drive the compliance process. The article also shows that the compliance process takes place at three stages: policy formulation at the international level, an “interpretation stage” in between the international and the domestic levels, and finally the domestic policy process.
    Date: 2019–05–07
  17. By: KAPSARC, King Abdullah Petroleum Studies and Research Center (King Abdullah Petroleum Studies and Research Center)
    Abstract: The Covid-19 pandemic and the responses to it have had a pronounced impact on the global economy. Major consuming sectors for petrochemicals, including cars and appliances, construction and textiles, have suffered a slump in demand. The production outputs of petrochemicals also vary across regions and countries, with the Gulf Cooperation Council (GCC) countries and China the least affected. Slowed economic growth, increased price volatility of feedstocks, intensified geopolitics and trade barriers, growing concern over health, safety and environment (HSE) standards, among other disrupters, are driving changes in the petrochemical industry.
    Keywords: System flexibility, Petrochemicals
    Date: 2020–12–26
  18. By: Hayat, Azmat; Muhammad Shafiai, Muhammad Hakimi; Haron, Sabri
    Abstract: Neoliberal principles are positively thought by hegemonic western countries as something beneficial to humanity and societies across the planet. This claim is in sharp contrast to the followers of Islam, who believes that more than 1400 years ago Islam already provided the best and everlasting ideology for the welfare of humanity. This study thoroughly investigated the claims of these contrasting ideologies. The hypothesis at the core of this endeavour is that neoliberal ideology is linearly associated with social costs, which can also be explained quantitatively as something associated with reduced standard of living. In order to investigate this hypothesis, USA and Saudi Arabia are selected as a sample. Besides analysing the previous literature, descriptive statistics from the most recent 2020 world Development Indicators are used for testing this hypothesis. Results indicates show that crime rate in the USA is higher than Saudi Arabia.
    Keywords: Social Costs
    JEL: B59 P00 P1 P16 P17 P4 P47 P5 P51 P52
    Date: 2021–02–03
  19. By: Sanginabadi, Bahram
    Abstract: This paper investigates the impacts of a large and exogenous oil price shock in December 1973 on mortality rates of the major oil producer nations of the Middle East and North Africa. We use longitudinal data from 1960 to 2014 and we apply the difference-in-differences approach to investigate the main question of the research. Our findings show that the oil price shock did not lead to higher GDP per capita, but it did lead to lower mortality. These findings are puzzling. A possible explanation is that the oil price shock allowed for higher spending on publicly funded health care. We find a positive impact of the oil price increase on the number of hospital beds which perhaps suggests that higher oil revenues increased spending on public health and that possibly decreased mortality.
    Date: 2021–03–16

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