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PurposeThe purpose of this study is to investigate the role of stock markets in economic growth and to shed some light on the macroeconomic determinants which must have an important influence on stock markets development.Design/methodology/approachThe empirical study is conducted using an unbalanced panel data from 12 Middle Eastern and North African (MENA) region countries. Econometric issues are based on estimation of some fixed and random effects specifications.FindingsIt is found that saving rate, financial intermediary, stock market liquidity and the stabilization variable are the important determinants of stock market development. In addition, it is found that financial intermediaries and stock markets are complements rather than substitutes in the growth process.Practical implicationsThis paper has some policy implications to MENA region countries. In order to promote stock market development in the region, it is important to encourage savings by appropriate incentives, to improve stock market liquidity, to develop financial intermediaries and to control inflation.Originality/valueSince it is unclear whether emerging markets in the MENA region respond, similarly, to economic and political shocks like other emerging markets and/or developed markets. This paper fills this gap by making an in‐depth analysis of 12 MENA capital markets in order to assess how they can improve their capital markets, and hence, benefit the global investor.

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This paper investigates the determinants of the Tunisian banks' performances during the period 1980-1995. Results show that the principal determinants of a bank's performance are by order of importance: labour productivity, bank portofolio composition, capital productivity and bank capitalization.

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This paper investigates the value creation process in the Tunisia stock exchange using a sample including more than 90% of the listed companies. In order to find out the determinants of the value creation of the selected companies, it uses the random probit model estimation procedure with unbalanced panel data. The results indicate that the probability of creating future values is positively and significantly correlated with profitability factor. In addition, the results also suggest that the value creation is affected by industry patterns (listed banks are the more value creator in the Tunisia stock exchange), by size (the probability to create value is stronger in small firms than in big ones) and by nature of property (the probability to create value is stronger in private-owned firms than in public-owned ones). Last but not least, the time trend factor is positive and highly significant. This finding suggests that the progressive reforms of the Tunisian stock exchange have attracted new investors, who have contributed by their purchase to the appreciation of the value of listed shares.

The authors study the dividend policy of 48 firms listed on the Tunisian Stock Exchange during the period 1996-2002. The study tests whether or not managers of Tunisian listed firms smooth their dividends. Moreover, the study outlines the main determinants that may drive the dividend policy of Tunisian quoted firms. To answer the first question, we use Lintner's model in a dynamic setting. The results clearly demonstrate that Tunisian firms rely on both current earnings and past dividends to fix their dividend payment. However, the study shows that dividends tend to be more sensitive to current earnings than prior dividends. To find out the determinants of dividend policy, dynamic panel regressions have been performed. First, profitable firms with more stable earnings can afford larger free cash flows and thus pay larger dividends. Furthermore, they distribute larger dividends whenever they are growing fast. However, neither the ownership concentration nor the financial leverage seems to have any impact on dividend policy in Tunisia. Also, the liquidity of stock market and size negatively impacts the dividend payment. The results are somewhat robust to different specifications. Copyright (c) International Review of Finance Ltd. 2007.

This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.Coordinating macroeconomic policies is a pre-requisite to a successful launch of the common currency in the GCC countries. Relying on the Behavioral Equilibrium Exchange Rate approach as a theoretical framework, we apply the Pooled Mean Group methodology to determine the similarity of the impact of a selected set of macroeconomic indicators on the real exchange rate in each country. Our empirical evidence points to a clear coordination of monetary policy, fiscal policy, government consumption, and openness across the member countries. While RER misalignments also show a substantial convergence building over time, differences in the misalignments of the two polar cases remain rather substantial, calling for further coordination and policy harmonization. JEL Classification Numbers: C23, E58, E63, F02, F15, F31, F36, F42.