The shadow economy’s size and impact remain subjects of extensive research and debate, holding significant implications for economic policy and social welfare. In Lebanon, the ongoing crisis since 2019 has exacerbated severe economic challenges, with the national currency’s collapse, bank crisis, and foreign reserve deficits. The World Bank reports Lebanon’s financial deficit surpassed $72 billion, three times the GDP in 2021. Despite a drastic decline in GDP, imports have surged to near-pre-crisis levels, exacerbating economic woes and indicating a constant outflow of foreign currencies. Considering such contracting facts, this paper aims to investigate global factors influencing the shadow economy and discern their manifestations in Lebanon during financial crises. Our methodology involves a comprehensive literature review, alongside a case study approach specific to Lebanon. This dual-method strategy ensures a detailed understanding of the shadow economy’s impact and the development of actionable insights for policy and economic reform. Through this approach, we seek to contribute to a nuanced understanding of Lebanon’s economic landscape and provide valuable guidance for policy decisions aimed at reducing corruption, promoting transparency, and fostering a robust formal economy. The increase in the shadow economy raises the formal economy risk, as resources and activities diverted to informal channels hinder the growth and stability of the official economic sector. Although focusing on Lebanon, this analysis deepens the comprehension of the economic landscape and provides valuable guidance for policymakers, researchers, and stakeholders, aiming to address the root causes of informal economic activities and promote sustainable growth in developing countries in general.

Amid Lebanon’s multifaceted economic crisis, this paper explores the intricate dynamics between political patronage networks and financial stability. Grounded in the theoretical frameworks of New Institutional Economics (NIE) and Project Management (PM), the study delves into how entrenched political elites and patronage networks have shaped Lebanon’s financial system, exacerbating vulnerabilities and perpetuating the ongoing crisis. Utilizing qualitative methods including in-depth interviews, document analysis, and case studies, the research illuminates the pivotal role of political actors and their vested interests in economic policies and financial institutions. The findings reveal systemic governance failures, crony capitalism, and institutional decay as underlying causes of Lebanon’s economic stress. In response, the paper proposes a comprehensive framework for governance reform that integrates insights from NIE and PM, emphasizing structured planning, accountability mechanisms, and institutional strengthening. The purpose of this study is not only to contribute to a nuanced understanding of Lebanon’s challenges but also to offer actionable insights for policymakers, academics, and stakeholders to address the root causes of the crisis and pave the way for sustainable economic recovery and revitalization.

Understanding the role of personal remittances in economic development is crucial, particularly for countries like Lebanon, where these inflows play a significant role in economic stability. This study investigates the impact of personal remittances on Lebanon’s economic development over the period from 2002 to 2022, employing a mixed-methods approach that combines quantitative regression analyses and qualitative data from surveys. The research finds that personal remittances have a more substantial effect on Lebanon’s GDP compared to foreign direct investment (FDI), with positive correlations observed between remittances and key economic indicators such as GDP, public debt, and unemployment rates. Additionally, qualitative findings reveal that remittances are vital for addressing basic living expenses, education, and healthcare needs, illustrating their multifaceted influence on household well-being. This study contributes to the existing literature by providing a nuanced understanding of how remittances impact economic development in Lebanon and highlights the need for policy interventions aimed at enhancing financial literacy and promoting productive investments. The findings offer valuable implications for policymakers and stakeholders, suggesting that improving the management and utilization of remittances could significantly bolster Lebanon’s economic resilience and growth prospects.

Financial crises are often expected to trigger industry renewal through processes of creative destruction; however, this outcome is not automatic. This study examines why the mechanisms associated with creative destruction failed to emerge in Lebanon’s banking sector during the crisis. Using a qualitative longitudinal case study and process-tracing approach, the analysis draws on regulatory documents, financial data, institutional reports, and secondary sources covering the period from 2014 to 2024. The findings show that successive regulatory interventions contained short-term pressures while preventing the restructuring mechanisms associated with industry renewal from emerging. Instead, these responses preserved a weakened banking structure and reinforced three interconnected mechanisms: strategic inertia, capability erosion, and the failure of the restructuring mechanisms associated with creative destruction. Over time, banks lost much of their capacity to perform core financial functions, public trust declined, and households and firms increasingly relied on cash and informal financial channels. The consequences extended beyond the banking sector, weakening financial intermediation, investment, monetary stability, and broader economic recovery. The study contributes to strategic management theory by showing that creative destruction is not an automatic response to crisis but an institutionally mediated process. The Lebanese case demonstrates how weak governance, the absence of credible restructuring, and limited mechanisms for institutional exit and resource reallocation can prevent industry renewal from emerging. It further shows how prolonged reliance on short-term crisis management can erode organizational capabilities and preserve dysfunctional institutions rather than promote adaptation and renewal.