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MENA Financial Sector Flagship Report

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Financial Access and Stability: A Roadmap for the Middle East and North Africa

The Financial Sector Flagship report, "Financial Access and Stability: A Roadmap for the Middle East and North Africa," is a comprehensive stock-taking exercise that assesses the performance of financial systems in MENA and identifies the agenda for financial sector development. The Financial Sector Flagship project covers all the relevant aspects of financial systems in the region: Financial Infrastructure, Financial Institutions, Financial Instruments, Financial Regulation, Islamic Finance and special access themes, such as Microfinance, SME Finance, and Housing Finance.

The report provides a diagnostic of financial development in the Middle East and North Africa (MENA) region and a roadmap for expanding access to finance while preserving financial stability. MENA has large banking systems but also the highest loan concentration ratios in the world, reflecting the focus of banks on large and well-connected enterprises. Large segments of the population and the enterprise sector -- especially small and medium enterprises -- remain deprived from finance due to the limited access to bank lending and other financial services, as well as the lack of suitable alternatives to bank finance".    

Financial Access and Stability shows that the poor access to financial services is due to lingering weaknesses in financial infrastructure (such as limited coverage of credit information and weak creditor rights), weaknesses in banking competition, and the lack of nonbanking financial institutions and markets to provide alternatives to bank finance. Expanding access to finance to households and small enterprises will entail improving financial infrastructure, strengthening bank competition, and developing nonbanking financial institutions and markets. A financial stability agenda is proposedto enable MENA countries to expand access to finance while preserving the resiliency of their financial systems.

The Financial Sector Flagship report was conducted by a team of technical experts from the World Bank and the MENA region, in consultation with member countries and in collaboration with regional partner institutions: the Arab Monetary Fund, the Islamic Development Bank, the Union of Arab Banks, the Union of Arab Stock Exchanges, and other regional associations.

The report will be launched at the upcoming 2011 Annual Meetings in September.

SECTION 1: Abstracts

The Status of Information Sharing and Credit Reporting Infrastructure

Recent enterprise surveys conducted by the World Bank show that on average only 20 percent of small and medium enterprises (SMEs) in MENA have a loan or a line of credit, a smaller share than those in all other regions. Effective credit reporting systems reduce uncertainties and allow creditors to evaluate the risk associated with lending money, lowering the cost of finance and promoting access to a broader range of borrowers... More

Increasing Access to Credit through Reforming Secured Transactions

The MENA region lags behind all others in firms’ access to private credit, as well as in the introduction of secured transactions reform. Reforming the area of secured transactions can result in increasing access to credit for businesses, particularly small and medium-sized enterprises (SMEs), and spur private sector development and economic growth… More

“No Way Out”: The Lack of Efficient Insolvency Regimes

Modern and efficient insolvency regimes allow a potentially viable debtor company to reorganize and survive its financial distress and continue operating productively in the economy. When reorganization fails, insolvency regimes should allow for the swift and fair conversion to liquidation. Efficient recovery and maximization of assets is, however, not the norm in MENA and bankruptcy is perceived as a last resort…

Payment And Securities Settlement Systems

Designing a payment system infrastructure in fast-changing technological and institutional environments becomes increasingly complex as competition and innovation require an always changing combination of efficiency, reliability, safety, and system stability. Individual MNA countries have been undertaking individual country payment system reforms, as well as exploring the gains achieved by adopting integrated frameworks for regional payment and securities settlement systems... More

Bank Competition

An extensive literature has shown that higher levels of bank competition are associated with lower prices for banking products, increased access to finance, and greater bank efficiency. The more competitive Middle East and North Africa's banking sector, the more stable and the less likely the landscape will be dominated by “too big to fail” financial institutions... More 

Status of Bank Lending to Small and Medium Enterprises

Small and medium-size enterprises (SMEs) have increasingly become a priority for policymakers in the Middle East and North Africa region, who see SMEs as key to solving the challenge of improving competitiveness, raising incomes, and generating employment... More 

A Review of Credit Guarantee Schemes

Partial credit schemes in MENA can play an important role in promoting the access to finance for financially isolated companies. In addition to establishing better credit registries and bureaus and strengthening creditor rights, governments in the region have been trying to establish partial credit schemes that efficiently reach a large number of firms while still maintaining financial viability… More

Financial Inclusion: Analysis and Roadmap Recommendations

While most MENA countries have taken steps to improve financial inclusion, there has not yet been a comprehensive high level commitment to financial inclusion across much of the region. The enabling environment for financial inclusion is still deficient and hinders the expansion of financial services at manageable costs and risk… More

Leasing: A Preliminary Assessment


The leasing industry has long existed in MENA and is currently active in 70% of the countries in the region. However, despite its long presence in MENA, the leasing industry remains generally under-developed by international comparison and there is a lot of potential for further growth... More

Challenges and Development Agenda of the Insurance Sector


The paper shows that life and non-life premiums, as well as assets, are very low relative to expected levels given per capita income and demographic characteristics, and examines the causes of such poor performance... More

Islamic Banking

Islamic finance in the Middle East and North Africa countries has become an important element of these countries' development agendas, and it is also gaining ground in the financial landscape of the region. It is a growing business as it caters to the financial needs of the people without conflicting with their social and religious values... More

Bank Ownership and Performance

Although there has been a sharp reduction in the role of state-owned banks in the past three decades, reflecting a general disappointment with their contribution to financial and economic development, state banks still play a substantive role in many emerging regions, including the Middle East and North Africa... More 

Deposit Insurance 

The number of explicit limited deposit insurance systems in the MENA region has increased rapidly over the last ten years. Countries that still rely on blanket guarantees are mainly the oil exporting countries and those with clear state control of the banking system... More

Reforming Government Debt Markets

 Local currency bond markets have grown considerably in emerging market economies (EM), but remain relatively undeveloped in MENA...

Housing Finance

An effective mortgage finance system can make an important contribution to economic growth, household welfare, urban development, and even labor mobility. Establishing an effective mortgage finance architecture can be challenging, however...More

SECTION 2: Analytical Papers 

Financial Infrastructure

  • The Status of Information Sharing and Credit Reporting Infrastructure : Full Paper
  • Increasing Access to Credit through Reforming Secured Transactions : Full Paper 
  • “No Way Out”: The Lack of Efficient Insolvency Regimes : Full Paper 
  • Payment And Securities Settlement Systems : Full Paper 

Financial Institutions


Access to Finance

  • Status of Bank Lending to Small and Medium Enterprises : Full Paper
  • A Review of Credit Guarantee Schemes : Full Paper 
  • Financial Inclusion: Analysis and Roadmap Recommendations : Full Paper 
  • Housing Finance: Full Paper





Financial Markets

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