DEVELOPMENT OF FINANCIAL MARKETS IN THE MIDDLE EAST AND NORTH AFRICA (MENA): HISTORICAL OVERVIEW, CURRENT STATUS, AND FUTURE OUTLOOK

The financial markets of the Middle East and North Africa (MENA) region exhibit a fundamental duality, with significant progress in infrastructure alongside ongoing challenges related to efficient capital allocation and financial stability. This study provides a comprehensive analysis of the historical, current, and future development trends within these markets, categorizing the region into four main groups: Gulf Cooperation Council countries, North Africa and the Levant and Iraq, and fragile states. The findings suggest that growth in Gulf countries is primarily driven by strategic government interventions rather than enhancements in market efficiency. Conversely, North African markets experience slower development due to weak governance and the absence of a well-established bond market. In the Levant, Iraq, and fragile states, functional financial markets are largely underdeveloped or absent, with informal financing mechanisms—such as remittances and commodity-based transactions—playing a predominant role. The study emphasizes that substantial financial transformation depends not only on technological advancement or superficial market listings but also on institutional reforms, legislative harmonization, and the strengthening of investor confidence. Accordingly, it is recommended that governments transition from acting primarily as financiers to assuming the roles of regulators and custodians of the financial system to promote sustainable growth.