This paper evaluates the financial and operating performance of newly privatized Egyptian state-owned enterprises and determines whether such performance differs across firms according to their new ownership structure. The Egyptian privatization program provides unique post-privatization data on different ownership structures. Since most studies do not distinguish between the types of ownership, this paper provides new insight into the impact that post-privatization ownership structure has on firm performance. The study covers 69 firms, which were privatized between 1994 and 1998. For these newly privatized firms, this study documents significant increases in profitability, operating efficiency, capital expenditures, and dividends. Conversely, significant decreases in employment, leverage, and risk are found, although output shows an insignificant decrease following privatization. The empirical results also show that Egyptian state-owned enterprises, which were sold to anchor-investors and employee shareholder associations, seem to outperform other types of privatization, such as minority and majority initial public offerings (JEL: G32, L33).

In this paper, we examine the influence of bank regulation, concentration, and financial and institutional development on commercial bank margins and profitability across a broad selection of Middle East and North Africa (MENA) countries. We cover the 1989-2005 period and control for a wide array of macroeconomic, financial, and bank characteristics. The empirical results suggest that bank-specific characteristics, in particular bank capitalization and credit risk, have a positive and significant impact on banks’ net interest margin, cost efficiency, and profitability. As for the impact macroeconomic and financial development indicators bear on bank performance, we conclude that these variables have no significant impact on net interest margins, except for inflation. However, inflation shocks seem to be passed mainly through the deposit rates and this type of transmission means that banks bear the entire negative cost of inflation. Also, the results suggest that banks lower their operating costs in a well-developed banking sector environment (as confirmed by the negative and statistically significant coefficient of the bank development variable in the cost efficient regression models). Furthermore, the stock market development variable is always positive and significant in all specifications, suggesting that banks operating in a well-developed stock market environment tend to have greater profit opportunities. Regulatory and institutional variables seem to have an impact on bank performance as the results suggest that corruption increases the cost-efficiency and net-interest margins while an improvement of the law and order variable decreases the cost of efficiency without affecting performance.

Using a non-parametric methodology, this paper analyzes managerial and scale efficiencies in the Jordanian banking sector over the period 1996-2001. The results indicate that the typical Jordanian bank could obtain significant (input and cost) savings should they catch up with the best practice banks (as much as 40%). Most of the managerial inefficiency is due to scale inefficiency (output related) rather than pure technical inefficiency (input related). We also find that most of the banks in Jordan experience increasing returns to scale in their operations. Apparently, significant economies of scale are available, could the Jordanian banks expand their operations by either internal or external growth.

Since few decades, a wide theoretical debate is concerned with the fundamental relationship between financial development and economic growth. An efficient financial system leads to a sustainable economic growth. In this study, we are interested especially with stock markets as a main component of the financial system according to the increasing role of financial markets in economies. So, their evolution plays an important role in economic growth. We shed some light on the macroeconomic determinants which must have an important influence on stock markets development. It is recognized that real or financial variables such as real income, saving rate, credit to private sector, M3, value traded, turnover, etc. could have a significant impact on market capitalization. The empirical study is conducted using an unbalanced panel data from twelve MENA region countries. Econometric issues are based on estimation of some fixed and random effects specifications. With such specifications in mind, peculiarities of MENA region countries are detected as well as differentiations among them. Thus, differences in market capitalization are explained. The empirical expected results must reinforce the idea which suggest the important role of economic development in promoting stock market development. Explaining power of variables such as real income, saving rate, inflation, financial intermediary development and stock market liquidity is confirmed. Banks and stock markets seem to be complements instead of substitutes.

This paper investigates relationships between market risk premium, time-varying variance and time-varying covariance in eleven Middle Eastern and North African (MENA) markets and eight developed markets from 1990 to 2001. Following Pettengill, Sundaram and Mathur (1995), we argue that the Capital Asset Pricing Model has only been partially examined because the negative portion of the market risk premium distribution has not been priory fully investigated. This issue is addressed by implementing a state-dependent multivariate GARCH methodology to proxy for a risk-return relationship. As a result, significant positive and negative relationships between risk premiums and conditional variance (covariance) are found in MENA capital markets (developed markets). We conclude that MENA markets are highly segmented and provide diversification benefits to the global investor. We test for asymmetric patterns of reward to risk and observe that six out of the eleven MENA markets return series exhibit overly pessimistic reactions unwarranted by market variance alone. This finding supports the overreaction hypothesis and sets grounds for contrarian portfolio strategies.

Since 1991 Egypt has witnessed major and radical changes in its economic climate as a result of the government's adoption of a program of economic reform aimed at increasing the growth rate of the economy. Arguably, this objective can be assisted through creating a strong stock market. This paper focuses on examining the impact of real interest rates as a key factor in the program on the performance of the Egyptian stock market, both in terms of market activity and liquidity. By applying Engle and Granger's two-stage procedure, results from co-integration analysis through error correction mechanisms (ECM) indicate significant long-run and short-run relationships between the variables, implying that real interest rates have an impact upon stock market performance.