Governance and Financial Development in MENA region

This paper uses annual aggregate data for 16 countries in Middle East and North of Africa (MENA) for the period 2001-2008, to determine the impact of a better quality or so-called good governance on financial development. We have used three governance indicators namely, political stability, control of corruption, and rule of law values published by the World Resources Institute(WRI). Our findings regarding political stability, and rule of law based on panel regression analysis support that better governance has a positive impact on financial development into the MENA region. Therefore, policies to improve governance indicators in the region are suggested.