On the linkage between monetary policy and MENA stock markets

Abstract EN

Using a sample of eight MENA region countries this study tries to understand whether there is an interaction between asset markets and monetary policy.

The nature of the relationship between asset price movements and monetary policy is currently a hotly debated topic in macroeconomics.

Relatively little empirical evidence is available that estimates the relationship between asset price movements and monetary policy measures.

From a comparative perspective, promising results reflect a significant effect of an appropriate monetary policy on stock market development especially in Bahrain, Egypt, Morocco, Saudi Arabia and Tunisia using a VAR methodology.

On the other hand, the responsiveness of stock markets differs across these MENA countries.

In some countries stock market return depicts an upward tendency while in other countries it declines or do react at all.