Financial Development and Economic Growth in the Maghreb Countries

Abstract

This article studies the link between financial development and economic growth in a panel of 4 Maghreb countries (Tunisia, Morocco, Algeria and Libya) over the 2011-2021 period. Using the generalized method of moment (GMM) estimator for linear dynamic panel data models, we find a positive relation between financial development and economic growth in Maghreb countries. We also find that economic freedom enhances economic growth. These results recommend the need to promote the financial reforms started since the mid-1980s and improve the efficiency of the financial systems of these countries to stimulate savings and investment and, therefore, economic growth in the countries of the region.