CIAO DATE: 06/05

Banking Reform and Development in the Middle East and Africa

Abstract

This study underscores the strategic role - both political and economic - of banking sector reform in the overall pursuit of economic development and democratization. It compares trajectories of banking sector reform in Middle Eastern and African countries that have remained on the margins go the new global economy. A close look shows that their governments' willingness to embrace reform has differed across contexts, as has the extent and pace of reform. Meanwhile, the effects of reform have also been very uneven. We model this variation in reform trajectories and its outcomes, propose a theoretical explanation for it, and use a set of case studies to illustrate the contrasts and casual dynamics that we have identified. Our main claim is that structural features of national political economics go far in defining actual trajectories of banking sector reform and liberalization. Structural features of national political economies that we define as key are the strength of indigenous private sector, and how it is linked to the state and foreign capital. We propose a typology of banking structure and reform trajectories and use case studies from the Middle East and Africa to illustrate variation in the politics of banking sector reform.

Full Text (PDF, 54 pages, 3.03 MB)