January 3, 2027
Time	Location	Event
00:00 to 00:00	Washington, DC - Marriott Marquis	ASSA (Date and Time TBA), Washington, DC - Marriott Marquis
January 7, 2027
Time	Location	Event
10:00 to 12:00	see below	Online Block 1 (Washington DC EDT TIME)
12:30 to 14:30		Online Block 2 (Washington DC EDT TIME)

Summary of All Sessions
Click here for an index of all participants

#	Date/Time	Type	Title/Location	Papers
1	January 3, 2027 0:00-0:00	invited	ASSA Panel Session (Shocks Beyond Borders: Navigating Compounding Crises and Structural Uncertainty in the Middle East)	0
2	January 3, 2027 0:00-0:00	invited	Employment Dynamics, Gender Disparities, and Welfare Policy-Lightening Round Session	7
3	January 3, 2027 0:00-0:00	invited	Environmental Economics and Climate Change-Lightening Round Session	7
4	January 3, 2027 0:00-0:00	invited	Financial Markets and Macroeconomic Shocks in MENA-Lightening Round Session	7
5	January 7, 2027 10:00-12:00	invited	Monetary Policy, Inflation, and Macroeconomic Dynamics	5
6	January 7, 2027 10:00-12:00	invited	Corporate Strategy, Firm Behavior, and Institutional Quality	5
7	January 7, 2027 10:00-12:00	invited	Climate Change, Energy Transition, and Environmental Policy	5
8	January 7, 2027 12:30-14:30	invited	Banking, Financial Markets, and Systemic Risk	5
9	January 7, 2027 12:30-14:30	invited	Sovereign Risk, Crisis Recovery, and Applied Methods	5
10	January 7, 2027 12:30-14:30	invited	Poverty, Inequality, Food Security, and Development	5

 

10 sessions, 51 papers, and 0 presentations with no associated papers

47th MEEA Annual Meeting
Detailed List of Sessions

Session 1: ASSA Panel Session (Shocks Beyond Borders: Navigating Compounding Crises and Structural Uncertainty in the Middle East) January 3, 2027
Session Chair: Mahmoud Mohieldin, UN Special Envoy & Professor of Economics and Finance at the Faculty of Economics and Political Science at the Cairo University
Session type: invited
Session 2: Employment Dynamics, Gender Disparities, and Welfare Policy-Lightening Round Session January 3, 2027
Session Chair: Hassan Aly, Ohio State University and Nile University
Session type: invited
Minimum Wages, Informality and Employment: Evidence from Egypt Abstract Minimum wage (MW) policies are widely used to improve earnings among low-wage workers, yet their effects remain ambiguous in developing countries characterized by large informal sectors. In such settings, where labor regulations apply to only a subset of workers, MW increases may generate heterogeneous wage and employment effects across labor market segments. This paper examines the effects of Egypt's first legally binding private-sector MW, introduced in 2021, providing a clear policy shock in a labor market where informality accounts for approximately 60% of employment. Despite extensive global research, there is no consensus on MW effects on wages, employment, and spillovers in high-informality settings, and evidence from the Middle East and North Africa (MENA) region remains markedly thin in the literature. This study offers the first empirical assessment of Egypt's recent reform and draws comparative insights for neighboring MENA economies undertaking similar wage-floor reforms under conditions of high informality and limited enforcement capacity. The study addresses three questions: (1) Does the policy raise wages in the formal private sector? (2) Are there spillover effects on workers outside formal salaried employment? and (3) How does the reform affect overall employment composition? I use repeated cross-sectional data from the nationally representative Egyptian Labor Market Panel Survey (ELMPS) for 2012, 2018, and 2023. The survey is uniquely suited to distinguishing formal wage workers from informal private-sector workers across two distinct margins — informal workers within formal firms (intensive margin) and workers in fully informal firms (extensive margin) — which is essential for identifying heterogeneous policy effects. I estimate a Difference-in-Differences (DiD) model exploiting pre- and post-reform variation, comparing formal private-sector workers directly affected by the policy to these two control groups. To validate the identifying assumption, I estimate an event study specification that tests for differential pre-trends across treatment and control groups. The analysis further explores heterogeneity by firm size and position in the wage distribution. The results indicate that the MW reform raised real monthly wages among formal private-sector workers by approximately 14% relative to the control group, with the probability of earning below the wage floor declining by 5.7 percentage points, consistent with partial compliance at the lower end of the wage distribution. Effects are larger among workers in firms with at least ten employees, with wage gains of approximately 20% and a reduction in sub-minimum wage incidence of 8.4 percentage points, suggesting that firm visibility and administrative capacity shape compliance. The event-study estimates show no evidence of differential pre-trends in the immediate pre-reform period, supporting the validity of the parallel trends assumption. Evidence on employment composition effects remains limited, with no strong indication of substantial formal sector job losses. Spillover effects are heterogeneous across informality margins: informal workers within formal firms show no significant wage response, while workers in fully informal jobs experienced a deterioration in relative wage outcomes, becoming more likely to fall below the MW threshold following the reform. These findings point to a segmented labor market in which wage regulation strengthens protection for covered workers but has limited, and in some cases adverse, transmission to informal employment. The reform widened rather than narrowed the wage gap between formal and informal segments. From a policy perspective, the results suggest that MW regulation can raise earnings without substantial employment losses where enforcement is feasible, but that compliance remains uneven and concentrated among larger, more visible firms. Strengthening labor inspection capacity and improving reporting mechanisms could extend these gains more broadly within the formal sector. Addressing the vulnerability of informal workers, nevertheless, requires complementary policies that go beyond minimum wages, including targeted formalization efforts and expanded social insurance coverage. JEL Classification: J31, J46, J38
By Nadine Amin; American University
Presented by: Nadine Amin, American University
Does Digital Disability Divide Persist in Egypt? Evidence from the 2018 and 2023 ELMPS Abstract The COVID-19 pandemic has accelerated the digitalization of economic and social activities worldwide, raising concerns about whether disadvantaged groups are equitably integrated into an increasingly digital economy. This paper examines the existence and evolution of the digital disability divide (DDD) in Egypt using nationally representative data from the 2018 and 2023 waves of the Egypt Labor Market Panel Survey (ELMPS). The analysis addresses first‑level digital divides related to ICT ownership and internet use. At the same level, the paper examines whether individuals with specific types of disabilities are more or less likely to have access to ICTs and how disability interacts with other social factors (e.g., gender) in shaping digital outcomes. Moreover, it provides preliminary insights into potential second‑level divides associated with digital skills, paving the way for future analyses on outcome divides (third‑level divide). Disability is measured using the UN‑Washington Group Short Set of questions, allowing for disaggregation by disability status, severity, and type. Empirically, the paper combines cross‑sectional logit models for 2023 with correlated random‑effects logit models that exploit the panel structure of the 2018 and 2023 waves to assess changes over time, particularly in the post‑COVID‑19 period. For the second‑level divide, a principal component analysis is applied to the newly introduced computer‑skills module in ELMPS 2023 to construct a composite index of digital skills, which is analyzed using linear regression. The results reveal a clear and persistent first‑level DDD in Egypt. Persons with disabilities (PwDs) systematically lag behind their non‑disabled peers in ICT ownership and, to a lesser extent, internet use, after controlling for socioeconomic and demographic factors. The ownership gap is considerably larger than the internet‑use gap, suggesting that access to ICT devices remains the primary barrier to digital inclusion. Dynamic evidence shows that although ICT ownership increased between 2018 and 2023 for both disabled and non-disabled groups, gains were substantially larger among non‑disabled individuals, leading to a widening disability‑based ownership gap after COVID‑19, while the internet‑use gap remained broadly stable. Furthermore, the magnitude of the divide varies by disability type and gender. For instance, visual disabilities are associated with a substantially wider ICT‑ownership gap. In contrast, individuals with hearing disabilities exhibit no significant lag in internet use by 2023, underscoring the substantial heterogeneity across disability types. Gender interactions further reveal that while the disability penalty in ICT ownership is smaller for females than for males, disabled females nevertheless exhibit the lowest overall odds of ICT ownership. Evidence on computer skills indicates that PwDs do not uniformly lag behind in skill possession; however, they are more likely to be concentrated in the lower mastery categories across many skills, pointing to substantial untapped potential. Overall, the findings confirm the persistence of digital inequality in Egypt and underscore the need for disability‑responsive, type‑specific, and socioeconomically targeted ICT policies that simultaneously expand affordable access to digital technologies and strengthen skill development to promote inclusive digital participation.
By Aida Ramadan; Faculty of Economics and Political Science- Cairo University    hanan nazier; faculty of economics and political scien    Racha Ramadan; Faculty of Economics & Political Science
Presented by: Racha Ramadan, Faculty of Economics & Political Science
How Exposed are Workers in MENA to AI? Evidence on Occupational Risks, Complementarity and the Digital Divide Abstract Artificial intelligence is increasingly reshaping labor markets worldwide. The rapid advancement, diversification and take-up of AI tools (henceforth, AI transformation) is also beginning to reshape the production models across the global South including in the developing countries of the Middle East and North Africa (MENA) with weaker digital infrastructure and significant skill-supply constraints. Yet, the impact of AI remains understudied in these countries. This study investigates how the diffusion of AI may transform employment in MENA, where structural vulnerabilities and heterogeneous digital infrastructure may mediate the transition from theoretical task exposure to actual productivity gains and heighten the risks of unequal technological penetration. Using detailed occupational microdata from Egyptian (2018, 2023), Jordanian (2010, 2016) and Tunisian (2014, 2022, 2023) nationally representative labor-market surveys, we classify workers by their AI exposure and complementarity using alternative task-based indices. Further, we evaluate the feasibility of AI-driven augmentation by cross-referencing these indices with household and regional access to computing and high-speed internet. The analysis documents substantial cross-country and within-country heterogeneity. While many high-skill, urban and younger workers are theoretically positioned to benefit from performing AI-complementary tasks, their ability to realize these gains is significantly constrained by the prevailing digital divide. Conversely, large segments, particularly rural residents, older workers, and those in low-digitized sectors face elevated substitution risks that persist regardless of their personal access to technology. Consistent with global trends, women tend to be more exposed to AI-driven transformation than men. Comparative results show that Jordan exhibits the highest exposure, Tunisia the lowest, and Egypt an intermediate profile. By quantifying the gap between theoretical complementarity and infrastructural readiness, the study offers targeted recommendations for digital policy, education systems, and social safety nets to facilitate an inclusive and growth-enhancing AI transformation. MENA region would benefit from more research on the process of diffusion of generative AI across MENA economies and the impacts on firms’ production processes and workers’ livelihoods. Comparative studies across MENA sub-regions – between GCC and non-GCC middle-income and least-developed economies – are also needed to clarify how differences in institutional capacity, labor-market structures, and digital ecosystems shape AI’s distributive impacts. Equally important is rigorous assessment of emerging policy tools, including reskilling initiatives, social protection instruments, and data-governance regimes, to determine which interventions effectively enhance adaptability and inclusiveness. This calls for building richer, more granular data systems that capture disparities across sexes, ages, formal and informal statuses, locations and other divides. Regional governments and educational institutions should also prioritize large-scale upskilling and reskilling programs, with a strong focus on AI-complementary abilities, such as advanced digital skills, problem-solving, communication, and managerial capabilities. Second, a coordinated governance framework for the Arab region is needed to ensure ethical data use, equitable access to digital tools, and safeguards for privacy and fairness (ESCWA 2025). Third, governments should pursue an integrated package of reforms covering an expansion of digital infrastructure, institutionalizing lifelong learning, modernizing labor regulations to protect platform, gig and informal workers, and strengthening social protection systems that can cushion households during structural change. Social dialogue between governments, employers, unions, and civil society will be crucial to maintaining legitimacy and inclusiveness. Finally, targeted support for micro, small, and medium enterprises, as well as entrepreneurs who lack resources to integrate AI, will be essential for broad-based adoption and productivity gains. With the right mix of skills development, industry regulation and social protection, policymakers can help ensure that AI becomes a driver of inclusive growth rather than a source of deepening unemployment, inequality and grievances across the MENA region.
By Shireen Alazzawi; Santa Clara University    Vladimir Hlasny; Ewha Womans University
Presented by: Shireen Alazzawi, Santa Clara University
Assessing the Future of Work for Forward-Looking Universal Social Protection: A Comparative Study of Lebanon and Egypt Abstract As the MENA region navigates a period of profound structural changes, the "Future of Work" (FoW) is being reshaped by two concurrent forces: rapid digital transformations—including the integration of artificial intelligence—and the global transition towards de-carbonization. This paper investigates how these shifts interact with existing social protection frameworks in Lebanon and Egypt, two countries that represent a "Most Different Systems Design" (MDSD) within the Arab labor market spectrum. While Egypt provides a case of a large, more centralized labor market, Lebanon offers a context of extreme fragmentation and crisis-driven volatility. The study identifies a critical "conundrum": while digitalization and the green energy transition offer paths towards modernization, they simultaneously drive labor market deregulation and flexibilization. These trends exacerbate informality and non-standard work arrangements, creating significant "blind spots" in social protection systems that were originally designed for traditional, stable employment models. Current systems in both nations are found to be fragmented, fiscally unsustainable, and non-inclusive, leaving them ill-equipped to respond to the labor shocks provoked by the transition to a digital and green economy. Adopting a rigorous mixed-methods approach, this research utilizes an original quantitative dataset collected through primary in-person surveys in both Lebanon and Egypt. This data is complemented by key informant interviews (KIIs) and validation workshops with regional experts and representatives of vulnerable communities. The analysis employs a multidisciplinary lens to examine the economic and sociological factors shaping the current work landscape, with a specific focus on the disproportionate impact of these shifts on marginalized populations. A central contribution of this paper is the disaggregation of data by gender, socio-economic profile, and economic sector, allowing for an intersectional analysis of vulnerability. By capturing how inequality is reinforced by the dearth of social protection in "flexibilized" markets, the study provides the empirical evidence necessary to propose a transition towards universal and adaptable social protection systems. The paper concludes by offering a set of feasible, forward-looking policy recommendations aimed at reversing the current trend of exclusion. It argues that for the Future of Work to be just and socially sensitive, social protection must be decoupled from traditional employment status and redesigned to be resilient against the technological and environmental transitions of the 21st century.
By Farah Al Shami; Arab Reform Initiative    Sarah Anne Rennick; Arab Reform Initiative (ARI)
Presented by: Farah Al Shami, Arab Reform Initiative
Labor Conventions and Gender Disparities in the Gulf Cooperation Council: A Quasi-Experimental Approach Abstract This research is motivated by low female youth labor force participation rates in the Gulf Cooperation Council countries and the adoption of the high-level labor conventions as external commitment mechanisms to foster equal labor rights. We empirically examine the impact of these external commitment mechanisms on youth and total LFPR and LFPR disparities using difference-in-differences estimation methodology as a quasi-experimental approach to address causal inference. The model accounts for country and time fixed effects. Empirical results show that the adoption of ILO Equal Remuneration convention by the UAE and Saudi Arabia increases female and female youth labor force participation rate and improves gender disparities. The result for female youth labor force participation rate is robust to controlling for both country and time fixed effects, the income level, technology, the degree of urbanization, the social contract, and gender inequality. Although high-level labor conventions may seem a panacea for gender disparities in the Gulf Cooperation Council, fundamental attention should be paid to addressing different dimensions of gender inequality.
By Wasseem Mina; United Arab Emirates University
Presented by: Wasseem Mina, United Arab Emirates University
Measuring the Redistributive Impact of Fiscal Policy on Inequality and Poverty in Egypt Abstract As the Government of Egypt implements economic reforms, evidence is needed to guide policies and public spending choices that aim to reduce poverty and strengthen equity. This paper assesses the redistributive role of fiscal policy in Egypt using a fiscal incidence analysis tool developed jointly by Egypt’s Ministry of Finance and the World Bank. The analysis uses a microsimulation approach, where the incidence of the fiscal system is analyzed via an estimation of “pre-fiscal” and “post-fiscal” income measures for Egyptian households. Data for the analysis are primarily derived from Egypt’s Household Income, Expenditure, and Consumption Survey (HIECS), along with administrative and budgetary data. The results show that Egypt’s fiscal system is progressive overall. On the revenue side, direct taxes such as the personal income tax are highly progressive, implying that they should be favored as tools to collect revenue. Indirect taxes are relatively regressive, in line with findings from other countries. On the expenditure side, given its pro-poor targeting, the Takaful and Karama cash transfer program is highly progressive both in absolute and relative terms. In general, the Egyptian fiscal system is reducing inequalities. When compared to other countries in the region and countries with similar levels of development, the redistributive effect of fiscal policy in Egypt is in the low range of the country ranking. This could be due to a lower effect of in-kind transfers on inequality in Egypt, relative to comparable countries. The overall effect on poverty headcount is modest but positive and relatively strong in relation to comparator countries, underscoring the large poverty-reducing role of social-assistance programs. For a given budget, a further reallocation of social-assistance spending toward pro-poor programs such as Takaful and Karama could yield a more equity-enhancing distribution of expenditures.
By Imane Helmy; World Bank
Presented by: Imane Helmy, World Bank
Bridging the Gender Finance Gap: Financial Inclusion and Women’s Economic Empowerment in MENA Countries Abstract Maximum of 1000 words. Your abstract should explain the research question, why it is important, the methodology, and the results (if available).
By Noha Emara; Rutgers
Presented by: Noha Emara, Rutgers
Session 3: Environmental Economics and Climate Change-Lightening Round Session January 3, 2027
Session Chair: Nathalie HILMI, Centre Scientifique de Monaco
Session type: invited
The Inclusion of Green and Blue Natural Capital in the Wealth of Nations Abstract Forests are among the largest terrestrial carbon reservoirs and play a critical role in regulating the global climate through carbon sequestration, yet this contribution remains largely absent from conventional economic metrics. While natural capital frameworks have advanced valuation of blue carbon ecosystems, integration of terrestrial forest carbon into economic accounting remains limited. We define Green Carbon Wealth (GCW) as the monetary value of annual forest carbon sequestration. Using FAO Global Forest Resources Assessment 2025 data and biome specific sequestration rates, we estimate a global forest sink of 3.86 ± xxx GtC yr⁻¹ (≈ 14.1 ± xxx GtCO₂ yr⁻¹, mean ± SD) over 2010–2019. Applying a Global Social Cost of Carbon of USD 573.8 tCO₂⁻¹ yields an annual value of USD 8.1 trillion, with uncertainty bounds of USD 6.9–9.3 trillion. GCW is highly concentrated, with tropical forests contributing ~65–70% of global sequestration and developing economies providing a large share of benefits. Also, the estimated climate finance gap, based on a benchmark of USD 100 billion annually over 30 years, is highly concentrated in a small number of countries, led by Brazil (≈USD 900 billion). These findings highlight the importance of incorporating forest carbon into wealth accounting and climate finance frameworks.
By Nathalie HILMI; Centre Scientifique de Monaco
Presented by: Nathalie HILMI, Centre Scientifique de Monaco
The Impact of Monetary Policy on Climate Change: A Meta-analysis Approach Abstract Monetary policy has recently gained substantial momentum in the macroeconomic policy approach toward climate change mitigation. Meanwhile, there is still a controversial theoretical and empirical debate on the environmental impacts of various monetary policy frameworks and tools. Some scholars argue that monetary policy can either significantly mitigate, exacerbate, or even be neutral with climate change. Therefore, this study conducts a meta-analysis using a data set of 708 estimates from 62 primary studies that empirically assessed the effects of monetary policy instruments on various indicators of climate change. The study applies multiple tests and correction of potential publication bias in the empirical literature of the environmental impacts of monetary policy, as there might be a publication bias in the negative direction. In addition, the primary studies in our sample utilize various sets of monetary policy indicators and frameworks, climate change measures, countries, timespans, econometric techniques, and control variables, which in turn influence the reported empirical estimates in these studies. Thus, the study tries to tackle the potential drivers of such heterogeneity in the various empirical estimates in the sample through conducting a meta-regression model that includes many moderators to account for the impacts of studies' various characteristics on the empirical estimates.
By Hebatalla Emam; FEPS - Cairo University    israa Israa; Cairo university    Nagwa Samak
Presented by: Hebatalla Emam, FEPS - Cairo University
Islamic Finance Development and Climate Resilience: A Cross-Country Comparative Analysis Abstract Climate risk has emerged as a new source of systemic risk to financial stability, prompting many countries to accelerate climate-related policy actions. Environmental protection is not a novelty within Islamic ontological construct, in which environmental stewardship is framed as a moral obligation rather than a voluntary commitment. Therefore, every transaction, including Islamic financial transactions, must consider the impact they have on the stakeholders by avoiding negative externalities. Islamic finance emerged in the modern era to offer alternative financing options that comply with Islamic law. In doing so, it is also expected to take into account the moral considerations in the decision-making process, which includes the impact on the environment and also climate. While the Islamic finance industry demonstrated unprecedented financial performance since its inception in the 1970s, including successful diffusion in global markets, the observed transactional success could not be located in the transformational objective such as considering social and environmental issues. The Islamic finance industry, therefore, has responded more slowly to climate-related risks. This lag is reflected in the rising exposure to both physical and transition climate risks in Muslim majority countries compared to other countries. Similarly, progress in green fiscal policies remains limited, as evidenced by lower green public spending and taxes, alongside persistently high fossil fuel subsidies. These risk dynamics and limited progress are complicating the transition toward a low-carbon economy, particularly given that nearly 90% of Muslim majority countries are classified as low- and middle-income economies, which are disproportionately vulnerable to climate risk exposures. This study, hence, aims to explore the relationship between Islamic finance development and climate resilience, assessing whether the multidimensional objectives embedded in Islamic finance translate into improved climate performance. The analysis employs the LSEG Islamic Finance Development Indicator (IFDI) as the main independent variable, alongside the IMF Financial Development Index (FDI), to compare how differing financial objectives influence climate outcomes. In the empirical analysis, climate performance is captured using the Notre Dame Global Adaptation Index (ND-GAIN), which incorporates measures of climate vulnerability and readiness, as well as carbon intensity to GDP. The empirical analysis covers 113 countries, both Muslim-majority and and non-Muslim-majority, as well as a focused analysis of the MENA region, over the period 2012-2023. The empirical models control for macroeconomic indicators, green finance variables, Islamic financing contract structures, and political regimes. The study applies panel-data regressions using fixed- and random-effects models and conducts a robustness check using dynamic panel regressions. In addition, sub-analysis of countries’ income level and OIC memberships is also conducted. A dynamic panel threshold model is employed to adapt the Environmental Kuznets Curve (EKC) framework, using ND-GAIN as climate resilience variable and the Islamic finance development as the financial transmission channel. Furthermore, Granger causality tests are conducted to explore the direction of causality between Islamic finance development and climate-related indicators. The findings suggest that Islamic finance development is broadly aligned with sustainability objectives. Countries with a more developed Islamic finance sector tend to exhibit higher climate resilience (as measured by ND-GAIN and climate readiness) and lower climate vulnerability. While no significant relationship is observed between IFDI and carbon intensity in the baseline model, the correlation becomes stronger when lagged IFDI is introduced, suggesting a delayed effect of Islamic finance development on emissions outcomes. The results also show that an autocratic regime type political system is associated with higher climate vulnerability, highlighting governance challenges in climate-risk management. The findings of sub-analyses reveal that the positive role of Islamic finance development is more pronounced in OIC countries and is particularly effective in supporting climate resilience and reducing vulnerability in low- and middle-income economies. In the MENA region, Islamic finance development contributes to higher climate resilience relative to non-MENA countries, while conventional financial development is associated with lower carbon intensity. However, further analysis of fossil fuel subsidies in the MENA region reveals a persistent trade-off between short-term stabilisation effects on climate resilience and longer-term decarbonisation risk, emphasizing a just and gradual transition. The EKC analysis identifies a reverse U-shaped relationship between country income and climate resilience: resilience improves with income growth up to a threshold, beyond which higher income is associated with declining resilience. This pattern highlights important policy implications, including the need for balanced and sustainable climate policies, enhanced cooperation between high- and low-income economies to support a just transition, and deeper integration of climate risk into Islamic finance regulatory and supervisory frameworks, alongside continued efforts to strengthen risk awareness and capacity-building. Finally, the causality analysis suggests distinct dynamics between Islamic and conventional financial development. The results indicate bi-directional causality between IFDI and ND-GAIN indicators, including climate readiness and vulnerability, whereas only unidirectional causality is observed from FDI to climate indicators. These findings suggest that conventional finance responds to climate pressures in a more reactive and opportunistic manner, often driven by climate shocks, regulatory changes and resilience needs. By contrast, Islamic finance exhibits signs of proactive adaptation, reflecting alignment with broader sustainability and developmental mandates. Hence, it seems that Islamic finance is turning towards the initial aspirational model by considering stakeholder interest including climate risk.
By Astrid Harningtyas; Durham University    Mehmet Asutay; Durham University    Alireza Zarei; Durham University
Presented by: Astrid Harningtyas, Durham University
Green Sukuk as a Financial Instrument for Energy Transition in GCC Countries: A Comparative Assessment of Issuance Patterns, Pricing Efficiency, and Portfolio Implications Abstract Objectives: This paper examines the emergence of green sukuk as an innovative Shariah-compliant financing instrument for renewable energy and sustainable infrastructure projects in Gulf Cooperation Council (GCC) countries. Against the backdrop of global decarbonization commitments and the GCC's economic diversification agendas (Saudi Vision 2030, UAE Net Zero 2050, Qatar National Vision 2030), we investigate whether green sukuk represents a viable alternative to conventional green bonds for channeling capital toward energy transition. The study addresses three interrelated research questions: (i) What drives the issuance patterns of green sukuk across GCC sovereign and corporate issuers? (ii) Are green sukuk priced efficiently relative to conventional sukuk and international green bonds? (iii) What are the portfolio diversification benefits of including GCC green sukuk in mixed-asset portfolios for MENA-based investors? Data: The empirical analysis employs a comprehensive dataset spanning 2016–2024. Green sukuk issuance data are compiled from the Islamic Finance Development Report, Refinitiv Eikon, and Bloomberg Islamic Finance databases, supplemented by prospectuses from sovereign issuers (Saudi Arabia, UAE, Qatar, Bahrain, Kuwait, Oman). Pricing data include secondary market yields, spreads over LIBOR/SOFR, and credit default swap (CDS) premia for 47 green sukuk instruments. Benchmark comparators comprise conventional sukuk (34 instruments), international green bonds issued by GCC entities (18 instruments), and regional MENA bond indices. Macroeconomic control variables include oil price volatility (Brent crude, monthly), fiscal breakeven prices, sovereign credit ratings, and ESG scores from MSCI and Refinitiv. Portfolio-level data comprise monthly total returns for GCC equity indices (Tadawul, ADX, DFM), global renewable energy equities (S&P Global Clean Energy), and conventional fixed-income benchmarks (J.P. Morgan EMBI, iBoxx USD). Methodology: The analytical framework integrates three methodological approaches. First, issuance determinants are modeled using a panel negative binomial regression with issuer-fixed effects, where the dependent variable is annual green sukuk issuance volume (USD billions) and explanatory variables capture fiscal constraints, oil revenue dependence, ESG commitment scores, and regulatory framework maturity. Second, pricing efficiency is assessed through (a) event-study methodology examining abnormal returns around issuance announcements, and (b) cointegration analysis (Johansen trace test) and vector error correction models (VECM) to test long-run price linkages between green sukuk, conventional sukuk, and green bond markets. Third, portfolio implications are evaluated using mean-variance optimization with fuzzy goal programming (FGP), extending our prior work on multi-segment portfolio optimization under uncertainty (Benbouziane et al., 2018, Renewable Energy). The FGP framework accommodates multiple target levels for expected return, variance, and renewable energy exposure, solved via genetic algorithm heuristics given the non-convexity of Shariah-compliant investment constraints. Results: Preliminary findings indicate that green sukuk issuance in the GCC is primarily driven by sovereign fiscal diversification pressures rather than pure ESG investor demand, with issuance volumes increasing by 0.4 standard deviations for every 10-dollar increase in fiscal breakeven oil prices above realized prices. Pricing analysis reveals a persistent "green premium" of 12–18 basis points relative to conventional sukuk, suggesting limited price efficiency and potential market segmentation. However, cointegration tests confirm long-run convergence between GCC green sukuk and global green bond markets, with adjustment speeds fastest for UAE and Saudi issuances (half-life of 2.3 months versus 4.1 months for Bahrain and Oman). Portfolio optimization results demonstrate that a 15% allocation to GCC green sukuk improves the Sharpe ratio of a MENA investor's baseline portfolio by 0.18 while reducing carbon intensity by 22%, though these gains are sensitive to oil price regime shifts modeled via Markov-switching variance specifications. Conclusions: Green sukuk constitutes a structurally important but imperfectly developed instrument for GCC energy transition financing. The observed green premium reflects market immaturity and limited secondary market liquidity rather than fundamental credit differentiation. For policymakers, our findings support the harmonization of Shariah governance standards across GCC jurisdictions and the development of sovereign green sukuk benchmarks to reduce issuance costs. For international investors, GCC green sukuk offers genuine diversification benefits within MENA portfolios, though exposure should be dynamically managed conditional on oil price regimes. This research contributes to the emerging literature on Islamic climate finance by providing the first integrated analysis of issuance drivers, pricing behavior, and portfolio properties for GCC green sukuk markets.
By rabia meriem benbouziane; Istanbul Technic University    Hadjer Boulila    mohamed BENBOUZIANE; Tlemcen University
Presented by: mohamed BENBOUZIANE, Tlemcen University
Climate Shocks, Labour Market Dynamics, and Inequality in MENA Abstract Objectives. This paper quantifies how climate shocks shape individual earnings and income inequality across the Middle East and North Africa (MENA), a region that is warming roughly twice as fast as the global average and where labour markets are characterised by high informality, low female participation, and a large agricultural workforce exposed to heat and water stress. We ask three questions: (i) Do temperature and rainfall anomalies reduce real earnings and inequality of MENA workers? (ii) Do these effects differ by gender, age, education, sector, and formal/informal status, and do they widen within-country wage and earnings inequality? (iii) How do projected warming pathways translate into medium- and long-run income losses across heterogeneous MENA labour markets? Literature, knowledge gap and value added. A growing macro literature shows that temperature shocks lower growth and amplify inequality, with effects concentrated in poor and hot economies (Dell, Jones and Olken, 2012; World Inequality Lab, 2026). Within-country evidence from the global south documents that climate shocks compress wages at the bottom of the distribution and widen Gini coefficients (Grantham Institute, 2023; Cambridge EDE, 2021), while the ILO (2019) projects that 2.2 per cent of global working hours—equivalent to 80 million full-time jobs—will be lost to heat stress by 2030, mostly in agriculture and construction. Evidence specific to MENA is thin: Abou-Ali et al. (2023) have begun to link climate to labour supply in Egypt, Jordan and Tunisia, and a recent World Bank panel finds droughts raise MENA unemployment by 1 pp and cut weekly hours by 4.4 per cent (World Bank, 2025), yet none jointly model heat and rainfall shocks, distributional incidence, and informality—the structural features that define MENA labour markets (AlAzzawi and Hlasny, 2022; Adair, AlAzzawi and Hlasny, 2024). This paper closes that gap. Value added is fourfold: (i) the first harmonised individual-level MENA panel merging ERF/ILOSTAT microdata with governorate-level climate exposure (ERA5-Land, CHIRPS, SPEI); (ii) joint dose-response estimation for temperature and precipitation shocks; (iii) distributional incidence via RIF and Theil decompositions, with heterogeneity by gender, sector, and formality; and (iv) CMIP6 SSP-linked labour-income projections relevant for adaptation and just-transition policy in MENA. Data. We assemble an individual-level panel by harmonising the Economic Research Forum’s Open Access Micro Data Initiative—including the Egypt (1998, 2006, 2012, 2018, 2023), Jordan (2010, 2016, 2025), Sudan (2022) and Tunisia (2014) Labour Market Panel Survey. Climate exposure is constructed at the district level-by-month level by merging high-resolution gridded reanalysis temperature and precipitation data from NOAA and NASA POWER, geocoded to respondents’ place of residence. Climate shocks are measured as deviations from 1981–2020 climatological norms. To project future impacts we draw on Coupled Model Intercomparison Project Phase 6 (CMIP6) ensemble outputs under five Shared Socioeconomic Pathways (SSP1-1.9 to SSP5-8.5). Methodology. We estimate two-way fixed-effects panel regressions of log earnings and income inequality on contemporaneous and lagged temperature and rainfall anomalies, controlling for individual, governorate, sector, and year fixed effects, with standard errors clustered at the governorate level. Distributional impacts are quantified through unconditional quantile (RIF) regressions and recentred Theil and Gini decompositions to identify whether climate shocks operate through the bottom or the top of the earnings distribution. Heterogeneity is examined along gender, education, age, urban/rural, sector (agriculture, manufacturing, services), and formality dimensions—an explicit response to the literature on informality and labour-market segmentation in MENA. We complement reduced-form estimates with an instrumental-variables strategy that exploits exogenous variation in growing-degree days, and we project income losses to 2050 and 2100 by combining estimated dose-response functions with CMIP6 SSP trajectories. All analysis is implemented in R (fixest, ggplot2, terra). Conclusions. Climate shocks are already a quantitatively important driver of labour-market vulnerability and inequality in MENA, with sharply unequal incidence across gender, sector, and formality. Adaptation policy in the region must move beyond agriculture-centred frameworks to include heat-protective labour regulation, social-protection extensions for informal workers, and active labour-market programmes targeting women and youth in heat-exposed occupations. Mitigation aligned with SSP1-1.9 yields measurable income and equity dividends, strengthening the economic case for a just energy transition in MENA.
By Yasmine Abdelfattah; University of Prince Edward Island    Shireen Alazzawi; Santa Clara University    Vladimir Hlasny; Ewha Womans University    Ronia Hawash; Butler University
Presented by: Vladimir Hlasny, Ewha Womans University
Who Plans Clean Energy Adoption? The Role of Firms’ Infrastructure in MENA Countries Abstract As global temperatures surpass the 1.5°C threshold above the pre-industrial level, the transition to renewable energy has become a critical priority for climate mitigation and economic stabilization. This study investigates the determinants of clean energy adoption among 3,309 micro, small, and medium-sized enterprises (MSMEs) in the MENA region, specifically focusing on Egypt, Jordan, Morocco, and Tunisia. While existing literature emphasizes the broad benefits of renewable energy, a significant gap remains regarding how firms leverage their existing infrastructure to facilitate green investments, particularly in data-scarce environments. Drawing on the 2023-2024 Transition to Clean Energy Enterprise Survey, we examine whether MSMEs’ perceived infrastructure access drives renewable energy investment. Using a generalized ordered Logit model, our findings reveal that firms with reliable infrastructure access are 33 percentage points more likely to invest in renewable energy compared to those with poor or inadequate access. To address potential reverse causality and spurious correlation between the investment decision and the perceived infrastructure readiness, we employ a leave-one-out instrumental variable (IV) approach, using the average infrastructure access of peer firms within the same governorate. The results suggest that regional spillovers do not significantly drive individual firm perceptions. Instead, infrastructure perception reflects objective, firm-specific conditions, including solar irradiation, dependency on backup generators, renewable energy awareness, and workforce education. These findings indicate that perceived infrastructure access serves as a rational proxy for actual operational constraints rather than a reflection of regional peer sentiment, offering key insights for energy policy in the MENA region.
By Souraya Baroudi; Lebanese American University    Walid Marrouch; Lebanese American University
Presented by: Walid Marrouch, Lebanese American University
Monetary Policy and Carbon Decoupling in the MENA Region: The Role of Regime Heterogeneity and Informality Abstract Objective: This paper investigates the dynamic relationship between monetary policy shocks and greenhouse gas (GHG) emissions across the Middle East and North Africa (MENA) region. While traditional environmental literature focuses on fiscal and regulatory instruments, this study explores the “monetary-environmental” nexus by exploiting the unique heterogeneity of monetary frameworks in the region, which provide a rich crosssectional laboratory for empirical analysis. The primary objective is to evaluate whether the institutional "anchor" of a central bank dictates the effectiveness of carbon decoupling. We introduce a categorical dummy to evaluate this institutional effect, where 0 represents crawling pegs, 1 denotes conventional pegs, and 2 identifies countries that have either adopted or are transitioning to an inflation-targeting (IT) framework. This structure allows us to test whether the degree of monetary autonomy and exchange rate flexibility provides the necessary policy space to influence the environmental trajectory of these economies. The MENA region is particularly pertinent due to its ongoing transitions, such as those in Egypt and Morocco, which provide a contemporary baseline for evaluating the success of flexible regimes over traditional fixed pegs in managing environmental externalities. Data and Methodology: The empirical analysis relies on a comprehensive panel dataset for the MENA region, integrating environmental metrics from Climate Watch and macroeconomic indicators from the World Bank’s World Development Indicators. To address the inherent endogeneity between monetary policy and economic activity, as well as the persistence of environmental variables, the study utilizes a Difference-GMM estimator. This is complemented by Jordà’s Local Projections (LP) to map the impulse response functions of emissions over a ten-year horizon. The choice of the Jordà method is motivated by its robustness to misspecification and its capacity to capture the non-linearities found in macroeconomic-environmental data. By simulating a 100-basis-point shock to the lending interest rate, we provide a high-precision identification of the temporal lags of policy transmission, treating the central bank’s actions as the fundamental "gears" of the economic system. Furthermore, a central contribution of this study is the integration of the informal economy as a critical "leakage" channel. By utilizing DGE-based informality estimates, we analyze how shocks affect the real cost of capital for both formal and informal sectors, observing whether the "stabilizing anchor" effect observed in other emerging markets holds true in a region characterized by significant structural rigidities. Expected Results: Extrapolating from previous findings in diverse monetary landscapes, the results are expected to show that the "Greening of Monetary Policy" is highly conditional on the prevailing regime and the level of shadow economy activity. Preliminary evidence suggests that economies classified under the IT/Transitioning dummy (2) exhibit a more pronounced and statistically significant reduction in emissions following a contractionary shock. In these frameworks, the central bank’s ability to communicate clear, forward-looking signals allows firms to adjust their capital allocation toward less carbon-intensive technologies as interest rates rise. Conversely, regimes with conventional pegs (1) or crawling pegs (0) are expected to experience “decoupling failure”. In these cases, the constraint of maintaining an exchange rate anchor often forces the central bank to prioritize currency stability over domestic environmental signals, leading to an inconsistent transmission where emissions remain unresponsive or even pro-cyclical relative to the monetary stance. Moreover, countries with high levels of informality are expected to show a dampened response to interest rate hikes, as informal firms operate outside the reach of the formal banking system, continuing carbon-heavy production regardless of the cost of credit, thereby acting as a barrier to the “Swiss watch” precision of monetary transmission. Conclusions: Ultimately, this research argues that achieving Paris Agreement targets in the MENA region requires a synchronization of monetary stability and environmental objectives. The study concludes that the cost of credit remains a powerful, yet underutilized, tool for climate mitigation, but its efficacy is tied to institutional quality and the clarity of the monetary anchor. For monetary policy to effectively support carbon decoupling, regional authorities must prioritize the transition toward more transparent and autonomous monetary frameworks while simultaneously addressing the structural barriers posed by the informal sector. By aligning the monetary “anchor” with environmental goals, MENA countries can ensure that interest rate signals serve as a credible mechanism for promoting a low-carbon transition. This paper provides a roadmap for central banks to integrate climate risks into their broader macroeconomic stability mandates, proving that the institutional framework is the fundamental gear behind successful environmental-macroeconomic coordination. It suggests that without a serious reform of the monetary transmission mechanism and a reduction in "informal leakage," the region’s climate commitments may remain unfulfilled due to the structural inability of the central bank to signal the true cost of carbon through interest rate adjustments.
By Freddy Rojas Cama; Universidad de Lima
Presented by: Freddy Rojas Cama, Universidad de Lima
Session 4: Financial Markets and Macroeconomic Shocks in MENA-Lightening Round Session January 3, 2027
Session Chair: Shawkat Hammoudeh, Drexel University
Session type: invited
Geopolitical Risks and Long-Term Betas in Global Stock Markets Abstract The effect of geopolitical risks (GPR) on financial markets is well documented in the literature. At the aggregate level, the literature shows that GPRs negatively affect economic growth prospects (Cheng and Chiu, 2018; Caldara and Iacoviello; 2022), investor sentiment (He, 2023) and stock market returns (e.g., Yang and Yang, 2021; Zaremba et al., 2022), while they contribute to higher volatility (Bouras et al., 2019; Ding et al., 2021), particularly bad volatility in stock market returns (Balcilar et al., 2018). Accordingly, exogenous shocks driven by GPRs have the potential to be decisive for the effectiveness of diversification strategies, particularly in markets that are prone to such shocks. However, the benefits from any diversification strategy depends highly on the stability of asset betas that capture the sensitivity of asset returns to aggregate market fluctuations (e.g. Chen et al., 2014; Han and Inoue, 2015; Su and Wang, 2017). Clearly, instability in beta estimates can lead to incorrect portfolio allocations, which in turn results in inferior risk-adjusted returns (Balcilar et al., 2021). Considering that GPRs are often cited by policy makers and investors as one of the determinants of investment decisions (Caldara and Iacoviello, 2016), this paper examines the effect of GPRs as on industry and country betas that are crucial not only for the effectiveness of industry and country diversification strategies, but also for the execution of smart beta strategies that rely on the accuracy and stability of factor exposures. In our empirical analysis, we use industry returns for G7 countries and eighteen emerging stock markets including Argentina, Brazil, Chile, China, Egypt, India, Indonesia, Malaysia, Mexico, Philippines, Poland, Saudi Arabia, South Africa, South Korea, Taiwan, Thailand, Turkey and Vietnam over the period Jan. 2000 - March 2026. Using the DCC-MIDAS framework, we estimate the long-term betas for select industries including Consumer discretionary, Consumer staples, Energy, Financials, Industrials and Technology driven by GPRs for each respective country. We then extend the analysis to country betas and examine the role of GPRs as a driver country betas, an issue of high importance for country diversification strategies. Our findings help to characterize the systematic risks at the industry and country levels facing different levels of geopolitical risk exposures.
By Riza Demirer; Southern Illinois University Edwardsvillle    Onur Polat; Hacettepe University    Asli Yuksel; Bahcesehir University    Aydin Yuksel; Isik University
Presented by: Riza Demirer, Southern Illinois University Edwardsvillle
Sanctions Relief and Trade Recovery: Evidence from Iran Abstract This paper examines how the removal of dyadic trade sanctions affects bilateral trade flows. While a growing literature documents the adverse impacts of sanctions on trade (e.g., Felbermayr et al., 2020; Larch et al., 2022; Larch et al., 2024; Felbermayr et al., 2025; Bista and Sheridan, 2025; Tabrizy and Roudsari, 2025), comparatively little is known about the dynamics of trade recovery once sanctions are lifted. To address this gap, I estimate the impact of sanctions relief, constructed using the Global Sanctions Database (GSDB) (Yalcin et al., 2025), on sectoral and product-level trade flows, obtained from the International Trade and Production Database for Estimation (ITPD-E) (Borchert et al., 2021; Larch et al., 2025a). I also control for joint membership in the World Trade Organization, European Union, and regional trade agreements. The sample begins in 2006, when the first set of UN Security Council sanctions was imposed on Iran. It ends in 2022, the last year reported in the most recent release of the ITPD-E. Relying on the obtained sample, I employ a structural gravity model with destination-year and origin-year fixed effects, which capture multilateral trade resistance, as well as destination-origin fixed effects, which capture time-invariant bilateral characteristics (Anderson, 1979; Eaton and Kortum, 2002; Anderson and van Wincoop, 2003; Baldwin and Taglioni, 2006; Yotov et al., 2016; Allen et al., 2020; Larch et al., 2025b). I focus on two sets of parameters. The first set captures the impact of sanctions relief on all sanctioned states except Iran, while the second set isolates the effect for Iran. In each set, I include three parameters for the lead, contemporaneous, and lagged effects of sanctions relief. To estimate the impact of the removal of sanctions on Iran following the implementation of the Joint Comprehensive Plan of Action (JCPOA) (Dadpay and Tabrizy, 2021), I include all parameters and exploit variation in trade across all destinations and origins. I first estimate these parameters for trade in the mining, agriculture, and manufacturing sectors. Further, within each sector, I estimate the parameters of interest across product categories, providing a granular view of which products benefit from or are adversely affected by sanctions relief. Conditional on other covariates and high-dimensional fixed effects, the results indicate that bilateral trade in Iran’s mining sector benefits significantly from JCPOA sanctions relief. Both the lead and contemporaneous effects are positive and statistically significant, while the lagged effect is positive but statistically insignificant. Across different products in this sector, the mining of iron ores as well as the extraction of crude petroleum and natural gas exhibit significant gains following sanctions relief. In contrast, the mining of hard coal and other mining and quarrying activities show no statistically significant response. Bilateral trade in Iran’s agricultural sector also benefits significantly from sanctions relief. The lead, contemporaneous, and lagged effects are all positive and statistically significant. Across different products in this sector, bilateral trade in staple grains, including wheat, rice, corn, and other cereals, benefits significantly from sanctions relief. A similar pattern is observed for fresh and prepared fruits, fresh vegetables, nuts, and forestry products. In contrast, the results for animal feed, eggs, and certain beverages are mixed, with both positive and negative estimates. Trade in non-sugar sweeteners, cotton, spices, and fishing products shows a negative response. Unlike mining and agriculture, the impact of sanctions relief on bilateral trade in the manufacturing sector is mixed. The contemporaneous effect is negative and marginally significant, while the lead and lagged effects are positive but statistically insignificant. Across broad manufacturing product categories, 16 industries exhibit positive and statistically significant lead, contemporaneous, and lagged effects. Examples include basic chemicals, coke oven products, ceramic products, and machinery used in food and beverage processing. In contrast, four industries exhibit negative and statistically significant effects across all three periods. Examples include basic iron and steel as well as electricity distribution and control equipment. For other product categories, the effects are either mixed, as in domestic appliances, or statistically insignificant, as in glass and glass products. These findings suggest that the trade effects of sanctions relief are neither uniform nor universally positive. While there is evidence of substantial trade recovery in resource-based and traditional sectors, the impact on manufacturing is more mixed. By documenting these differences, this paper contributes to the literature on sanctions, post-sanctions recovery, and trade adjustment, offering new evidence on how target countries reintegrate into the global economy following the easing of major trade restrictions.
By Saleh Tabrizy; The University of Oklahoma
Presented by: Saleh Tabrizy, The University of Oklahoma
What Lies Behind Pegged Exchange Rate Stability? Oil Prices, Geopolitical Risks, and the Role of External Debt in Exchange Market Pressure in the GCC Abstract Although GCC countries have operated under pegged exchange rate regimes for decades, their currencies may still face significant pressure behind the scenes, driven by external variables such as oil price fluctuations, geopolitical risks, U.S. Federal Reserve monetary policy, and inflation differentials with the United States. Because GCC countries differ in their dependence on oil revenues and in their levels of public debt, their currency resilience to external shocks may also differ. This raises the question of how these differences play a role in the resilience of pegged exchange rate regimes. The existing literature on GCC countries mainly focuses on public finance, economic diversification, and foreign direct investment. In contrast, studies that examine what happens behind fixed exchange rates remain limited. This paper constructs a monthly Exchange Market Pressure Index (EMPI) for each GCC country over the period 2010–2026 to capture hidden pressures on the exchange rate through changes in foreign reserves, interest rate adjustments, and exchange rate movements. Using a country-specific VAR/SVAR framework, the analysis examines the impact of oil prices, geopolitical risks, global financial volatility (VIX), inflation differentials with the United States, and external debt on exchange market pressure. By focusing on what happens behind the fixed exchange rate, the paper highlights how similar pegged regimes in wealthy economies can respond differently to the same external shocks. It also shows the role of external debt and macro-financial conditions in shaping the resilience of exchange rate pegs in oil-exporting economies.
By Layal Mansour-Ichrakieh; American University of Kuwait    Mohamad Elian; American University of Kuwait
Presented by: Layal Mansour-Ichrakieh, American University of Kuwait
The Impact of the 2023-2026 Israeli Attacks on Inflation in Lebanon Abstract This paper examines the inflationary consequences of Israel-Lebanon geopolitical tensions and attacks during the 2023-2026 escalation. Building on Iacoviello and Tong (2026), I use the bilateral AI-GPR index, which applies large language models to newspaper text to measure directed geopolitical risk between country pairs. This structure allows the analysis to focus on risk directed from Israel to Lebanon. Using disaggregated price data for consumer goods and services, I estimate a dynamic panel model to assess how bilateral geopolitical risk shocks affect inflation across categories. The results suggest that a one-standard-deviation increase in the bilateral AI-GPR index is associated with a significant rise in consumer price inflation in Lebanon. The effect is heterogeneous across goods and services categories, indicating that conflict-related disruptions may operate through sector-specific channels such as energy costs, transportation costs, and supply-chain uncertainty. The findings underscore the value of disaggregated price data for evaluating the inflationary effects of geopolitical shocks in small open economies exposed to recurrent conflict.
By Mohamad Karaki; Lebanese American University
Presented by: Mohamad Karaki, Lebanese American University
Chronic Inflation, Cognitive Anchor Collapse, and Purchasing Power Anxiety: Evidence from Egypt Abstract Egypt has experienced three seismic inflationary episodes in little more than a decade — the post-Arab Spring disruption of 2011, the currency liberalization of 2016, and the compounding price surges of 2022–2024 — have driven cumulative consumer price increases exceeding 400% across key commodity categories. While the macroeconomic literature has extensively documented the monetary and output consequences of sustained inflation, the psychological burden imposed on households — specifically the mechanisms through which price misperception translates into financial stress and distorted expectations — remains underexplored in MENA economies. This study fills this gap by empirically examining how the collapse of internalized price anchors and widening price perception gaps generate purchasing power anxiety and upward-biased inflation expectations among Egyptian urban households. The study's theoretical core draws on Malmendier and Nagel's (2016) Experience-Weighted Learning Model, which demonstrates that individuals systematically overweight personally lived inflation experiences when forming price perceptions, producing predictable biases in both current price evaluations and forward-looking expectations. When the gap between an individual's internal reference price — formed during earlier periods of relative stability — and prevailing market prices widens significantly, the resulting cognitive dissonance is hypothesized to manifest as purchasing power anxiety: a domain-specific form of financial stress rooted in the perceived erosion of real economic capacity. Drawing further on Shafir, Diamond, and Tversky's (1997) money illusion framework, the study examines whether nominal salary growth has masked real purchasing power deterioration, intensifying perception gaps and the anxiety they generate. Roy et al. (2024) confirm that inflation-related stress is significantly associated with anxiety among working-age adults, providing empirical support for treating purchasing power anxiety as a measurable psychological outcome. Therefore, this study aimed to test whether the price perception gap and cognitive anchor collapse significantly predict purchasing power anxiety and inflation expectation bias in urban Egypt and to assess the moderating roles of generational cohorts and household income. Data were drawn from a purpose-designed survey administered to 400 respondents across Egypt's major urban centers (Cairo, Giza, and Alexandria), selected through stratified purposive sampling across generational cohorts, income bands, employment sectors, and gender. The instrument captures price anchor strength, objective price perception accuracy, measured as the signed deviation between respondent-estimated and actual market prices across eight commodity categories (food, meat, housing rent, gold, transport, education, utilities, and consumer durables); a purchasing power anxiety scale adapted from validated inflation-stress instruments (Roy et al., 2024); and inflation expectation bias, computed as the difference between respondents' 12-month expectations and the official consensus forecast. A salary module records first and current monthly salaries alongside recalled and present purchasing power baskets, enabling the direct computation of real income deterioration at the individual level. The structural model is estimated using Partial Least Squares Structural Equation Modelling (PLS-SEM) in SmartPLS 4, with 5,000-subsample bootstrapping for mediation and moderation inference. Moderation interaction terms were constructed following Hair et al. (2022) via the product indicator approach. The initial results of the pilot study confirm the hypothesised pathways. Price perception gap exerts a strong, positive effect on purchasing power anxiety (β = 0.41, p < .001), which in turn significantly predicts upward inflation expectation bias (β = 0.36, p < .001). Moderation analysis shows that generational cohort significantly amplifies the gap–anxiety relationship, with Millennials exhibiting the largest interaction coefficient, while higher household income significantly attenuates the anxiety–expectations pathway. Real purchasing power analysis further shows that urban Millennials' purchasing baskets have contracted approximately 35–45% since labor market entry — a magnitude substantially underestimated by respondents, confirming persistent money illusion (Shafir et al., 1997). These findings demonstrate that Egypt's inflation crisis extends beyond price levels into the cognitive and psychological domains of economic life. Policymakers must address not only monetary fundamentals but also household-level perceptual distortions that sustain upward expectation bias, particularly among urban Millennials, who represent the backbone of Egypt's productive workforce.
By Islam Abdelbary; Arab Academy for Science, Technology & Maritime Transport
Presented by: Islam Abdelbary, Arab Academy for Science, Technology & Maritime Transport
Islamic Constitutionalism, Oil, and Democracy: Evidence from a Long Panel of OIC Countries Abstract There is an ongoing debate regarding the relationship between Islam, oil wealth, and the (lack of) democratization. A substantial body of research finds that natural resource income has a negative effect on democracy. This effect is most apparent in oil-dependent economies, which are often characterized by the “oil curse” (Ross, 2001, 2012; van der Ploeg, 2011). However, another strand of the literature argues that the persistence of authoritarian institutions in the Middle East is better explained by Islamic institutional factors that historically precede the importance of oil (Fish, 2002; Kuran, 2016). In fact, several studies point out that oil-rich Islamic countries were largely autocratic long before the discovery of oil (Chaney, 2012; Kuran, 2013; Rørbæk, 2016). Against that background, this study empirically examines the effect of constitutionally embedded Islamic law on the development of democratic institutions. We construct a novel long panel dataset of OIC countries over more than five decades. To operationalize Islamic constitutionalism, we draw on the Comparative Islamic Constitutions Database (1861–2022) by Gouda (2026), which provides a comprehensive and systematically coded measure of constitutional provisions across all OIC member countries. As our dependent variable, we use the multidimensional V-Dem dataset, which captures the complexity of democracy beyond the mere presence of elections. We control for oil rents, GDP per capita, globalization, human capital, income inequality, state capacity and the level of democracy among regional neighbors. There are several advantages to our approach. First, existing empirical research on Islam and democracy tends to prioritize informal institutions, typically proxied by the share of Muslim population (Fish, 2002; Potrafke, 2012; Rød et al. 2020). However, formal and informal institutions may be complementary, competing, or overlapping (Jütting et al., 2007). By focusing on constitutional provisions, we capture Islam as a formal institution and contribute to the growing literature on the role of constitutions in shaping political and economic outcomes. Second, the historical depth of the Comparative Islamic Constitutions Database enables us to examine the influence of Islamic institutions prior to the emergence of oil rents, thereby helping to mitigate concerns about endogeneity. Third, the use of V-Dem data on democracy allows us to capture the multidimensional nature of democracy, in contrast to narrower electoral measures commonly employed in the literature, including those employed in earlier work (Gouda and Hanafy, 2022). References Chaney, E. (2012). Democratic change in the Arab world, past and present. Brookings Papers on Economic Activity, 2012, 363–400. Fish, M. S. (2002). Islam and authoritarianism. World Politics, 55(1), 4–37. Gouda, M., & Hanafy, S. (2022). Islamic constitutions and democracy. Political Research Quarterly, 75(4), 994–1005. Gouda, M. (2026). The Comparative Islamic Constitutions Database (1861–2022) (Unpublished manuscript). Hankuk University of Foreign Studies. Jütting, J., Drechsler, D., Bartsch, S., & de Soysa, I. (2007). Informal institutions: How social norms help or hinder development. OECD. Kuran, T. (2013). The political consequences of Islam’s economic legacy. Philosophy & Social Criticism, 39(4–5), 395–405. Kuran, T. (2016). Legal roots of authoritarian rule in the Middle East: Civic legacies of the Islamic waqf. The American Journal of Comparative Law, 64(2), 419–454. Potrafke, N. (2012). Islam and democracy. Public Choice, 151, 185–192. Rød, E. G., Knutsen, C. H., & Hegre, H. (2020). The determinants of democracy: A sensitivity analysis. Public Choice, 185, 87–111. Rørbæk, L. L. (2016). Islamic culture, oil, and women’s rights revisited. Politics and Religion, 9(1), 61–83. Ross, M. L. (2001). Does oil hinder democracy? World Politics, 53, 325–361. Ross, M. L. (2012). The oil curse: How petroleum wealth shapes the development of nations. Princeton University Press. van der Ploeg, F. (2011). Natural resources: Curse or blessing? Journal of Economic Literature, 49, 366–420.
By Moamen Gouda; Hankuk University of Foreign Studies    Shimaa Hanafy; Hankuk University of Foreign Studies
Presented by: Shimaa Hanafy, Hankuk University of Foreign Studies
Rethinking Preferred Creditor Status for All:Lessons from the Afreximbank Experience Abstract This paper examines the concept of Preferred Creditor Status (PCS) through the case of African Export-Import Bank, arguing that the current sovereign debt architecture applies PCS inconsistently and in ways that reinforce structural asymmetries within the global financial system. PCS refers to the de facto repayment priority granted to institutions such as the IMF and World Bank during sovereign debt restructurings to preserve their financial stability and enable continued crisis lending. However, unlike traditional international financial institutions, regional multilateral development banks (MDBs) such as Afreximbank lack universally recognized PCS despite their developmental mandates and treaty-based legal protections. The paper analyzes how this ambiguity became evident during the sovereign debt restructurings of Ghana and Zambia. During the COVID-19 pandemic and subsequent commodity shocks, Afreximbank significantly expanded lending to African economies when access to international capital markets had collapsed. As several borrowers entered debt distress, disputes emerged regarding whether Afreximbank’s claims should be exempt from restructuring. Creditors and rating agencies challenged the bank’s PCS claims, arguing that its lending structure resembled commercial finance because of relatively high interest rates, short maturities, and collateralized arrangements. This contributed to credit downgrades and increased scrutiny of the bank’s financial position. Using the Afreximbank experience, the paper argues that PCS is currently governed less by transparent legal principles than by geopolitical influence and market convention. While the IMF and World Bank benefit from entrenched institutional recognition, regional MDBs face higher funding costs, weaker market confidence, and greater exposure to restructuring risks. These asymmetries undermine the ability of Southern-led development institutions to provide counter-cyclical financing and support regional economic stability during crises. 1 Professor, Columbia University School of International and Public Affairs; co-President, Columbia University Initiative for Policy Dialogue (IPD); Professor of Money, Credit, and Banking, National University of La Plata; Academic Member of the Pontifical Academy of Social Sciences. 2 Professor of Economics and Finance, Cairo University; Visiting Senior Research Scholar, Columbia Business School; Senior Nonresident Fellow at the Brookings Institution. 3 Associate Professor of Economics, The British University in Egypt. The paper proposes reforming PCS through a transparent and rules-based framework, potentially under the G20 Common Framework. It recommends establishing objective criteria linked to development impact, governance standards, concessionality, and crisis- response functions, alongside a graduated PCS system for regional MDBs. The paper concludes that a clearer and more inclusive PCS regime is essential for strengthening sovereign debt governance, improving restructuring predictability, and enabling regional
By Martin Guzman    Mahmoud Mohieldin; UN Special Envoy & Professor of Economics and Finance at the Faculty of Economics and Political Science at the Cairo University    Joseph E. Stiglitz; Columbia University    Sarah El-Khishin; The British University in Egypt
Presented by: Sarah El-Khishin, The British University in Egypt
Session 5: Monetary Policy, Inflation, and Macroeconomic Dynamics January 7, 2027 10:00 to 12:00
Session Chair: Vladimir Hlasny, Ewha Womans University
Session type: invited
Geopolitical Risk and Disaggregated Inflation in Egypt Abstract Geopolitical risk has become an increasingly important driver of macroeconomic fluctuations, particularly in emerging economies highly exposed to external shocks. This paper examines the effects of geopolitical risk on aggregate and Disaggregated inflation in Egypt using a Bayesian vector autoregression (BVAR) framework. The results indicate that geopolitical risk shocks are inflationary, leading to persistent increases in headline inflation. However, the effects are heterogeneous across consumer price index (CPI) components. Food, transport, and housing exhibit the strongest responses, reflecting global supply disruptions, commodity price fluctuations, and trade frictions. In contrast, sectors such as education, health, and communication show muted responses, consistent with the presence of subsidies and administered pricing mechanisms. Despite these inflationary effects, geopolitical risk explains only a modest share of overall inflation variability, suggesting that domestic factors account for a larger share. Historical decomposition results further suggest that the contribution of geopolitical risk becomes more pronounced during periods of heightened global tensions, including the Russia–Ukraine war and regional conflicts. Overall, the findings highlight the importance of sectoral analysis in understanding inflation dynamics in emerging economies.
By Samantha Borkhoche; Lebanese American University    Mohamad Karaki; Lebanese American University
Presented by: Samantha Borkhoche, Lebanese American University
Evaluating the Effectiveness of Alternative Monetary Policy Rules in Emerging Markets with Bayesian Structural VAR Abstract Emerging market central banks (EMCBs) often face unique challenges in designing effective monetary policy due to external vulnerabilities such as volatile capital flows and exchange rate fluctuations. Taking Türkiye as a case study, this paper develops a Bayesian structural vector autoregression (B-SVAR) model identified via sign restrictions to evaluate the counterfactual inflation outcomes of alternative interest rate policies. We implement a novel counterfactual simulation strategy based on a recursively shock-adjusted system and find that, as early as 2010, the Central Bank of the Republic of Türkiye began to deviate from its previously successful inflation targeting (IT) regime. This deviation contributed to a deterioration in inflation performance well before the adoption of its later unorthodox monetary policy framework.
By Ozan Hatipoglu; Bogazici University
Presented by: Ozan Hatipoglu, Bogazici University
The War on Iran and Inflation: Distributional Impacts on Egyptian Households Abstract In March 2026, the onset of the war on Iran and the blockade of the Strait of Hormuz led to soaring energy prices. The war and its effects on commodity markets have brought large-scale negative shocks that many countries in the region were ill-equipped to handle as they grappled with existing structural deficiencies in terms of socioeconomic, institutional and governance factors. The war added to these challenges by straining global supply chains. Egypt was among the most affected countries in the region, given its fractured markets, labor market precariousness, and outsized reliance on imports of energies and staples such as wheat and cereals. This study aims to estimate the effect of soaring prices on households’ welfare. Using commodity-level data for January 2025–March 2026 and the most recent 2023/2024 Egyptian household income, expenditure and consumption survey (HIECS), we investigate the pass-through of commodity prices through households’ consumption and substitution patterns to households’ cost of living. We then calculate the compensating variation required to keep households at their February 2026 welfare levels. We estimate households’ responses and identify the most affected socio-economic groups. Preliminary estimations show that those lower down the expenditure distribution and residents of rural areas experienced higher welfare losses. In March 2026, when prices rose the fastest compared to the prior fourteen months, the bottom decile of rural residents faced markedly higher inflation than higher-decile rural households or urban households. The poorest rural residents faced nearly double the inflation rate faced by the richest urban households. The compensating variation is higher for poorer and rural households. While the median households eventually ‘catch up’ in welfare loss, the top decile groups fare better.
By Shireen Alazzawi; Santa Clara University    Vladimir Hlasny; Ewha Womans University
Presented by: Vladimir Hlasny, Ewha Womans University
Asymmetric Oil-Price Pass-Through to Inflation in Algeria:Evidence from a Nonlinear ARDL Framework Abstract This paper investigates the presence and nature of asymmetric oil-price pass-through to consumer price inflation in Algeria over 2002Q1–2025Q2, using the Nonlinear Autoregressive Distributed Lag (NARDL) framework of Shin, Yu, and Greenwood-Nimmo (2014). Algeria constitutes an instructive case study: as a major hydrocarbon exporter operating a managed exchange-rate regime with pervasive administered-price controls and fuel subsidies, it represents a class of resource-rich economies in which the standard symmetric pass-through assumption is unlikely to hold. We employ 94 quarterly observations on the Algiers Consumer Price Index, the Brent crude oil price, and the USD/DZD nominal exchange rate, supplemented by real GDP growth and government final-consumption-expenditure growth. Unit-root tests confirm that the core price-level and oil-price variables are integrated of order one, I(1), satisfying the maintained bounds-testing assumption. Linear ARDL and Gregory-Hansen cointegration tests fail to detect a stable long-run relationship under any deterministic case, suggesting that the symmetric specification is fundamentally misspecified. Once Brent is decomposed into cumulative positive and negative partial sums, the NARDL bounds test establishes cointegration (F = 5.179 > 5% upper bound of 4.010). Long-run symmetry is decisively rejected (Wald F = 11.471; p = 0.001), while short-run symmetry is not rejected, indicating that the asymmetry is a long-run phenomenon. The estimated long-run elasticity with respect to oil-price increases is 0.126 and highly significant; oil-price decreases carry a coefficient statistically indistinguishable from zero, revealing a ratchet effect consistent with administered prices and fiscal subsidy smoothing. The error-correction coefficient implies a half-life of approximately 5.4 quarters. Structural-break analysis confirms a significant decline in pass-through after the 2014–2016 oil-price collapse, with a partial recovery post-2022. All results survive robustness checks including alternative lag selection, exclusion of the exchange rate, and augmentation with domestic demand and fiscal controls. The findings carry direct implications for fuel-subsidy reform, monetary policy communication, and fiscal management in commodity-dependent economies.
By abdelhadi benghalem; Oran Scholl of econoics    mohamed BENBOUZIANE; Tlemcen University
Presented by: mohamed BENBOUZIANE, Tlemcen University
The Nexus between Income Inequality and The Effectiveness of the Interest Rate Channel of Monetary Policy in Emerging Economies Abstract The effect of monetary policy on income inequality has been extensively studied in the literature, nevertheless, the effect of a sustained level of income inequality on the transmission of monetary policy to banks' short-term interest rates has been empirically understudied. A higher level of income inequality leads to lower aggregate savings, lower economic growth, higher macroeconomic uncertainty, and financial instability. Coibion et al. (2020) argued that banks provide less credit at higher interest rates to low-income households in high-income inequality regions compared to low-income inequality regions. In high-income inequality regions, income became a crucial signal for creditworthiness. Thus, a higher level of income inequality is associated with a higher portion of credit-constrained households facing higher borrowing costs from banks. Thus, banks do not fully transmit monetary policy changes to those households. That’s to say, the interest rate channel of monetary policy transmission is less efficient with higher levels of income inequality. Moreover, monetary policy tools do not target specific segments of households, thus, a higher level of inequality would undermine the monetary transmission to consumption. As high-income households are usually less responsive to monetary shocks. To this end, the present study attempts to assess the impact of income inequality on the interest rate channel of monetary policy transmission. The study employs a panel data model from the period 2006 – 2024 for a set of emerging markets, including Egypt and some MENA countries, to investigate how the presence of income inequality could hinder the transmission of monetary policy shocks to short-term interest rates. Moreover, this study seeks to identify whether such an effect is heterogeneous or not among various credit market segments (small firms versus large firms) and types of loans (consumer loans versus housing loans).
By Hebatalla Emam; FEPS - Cairo University    Noha Omar; Faculty of Economics and Political Science
Presented by: Hebatalla Emam, FEPS - Cairo University
Session 6: Corporate Strategy, Firm Behavior, and Institutional Quality January 7, 2027 10:00 to 12:00
Session Chair: KungCheng Ho, Guangdong University of Finance and Economics
Session type: invited
Epidemics and Ethics: How Global Crises Shape Corporate Social Responsibility Abstract This study examines the influence of pandemic outbreaks on corporate CSR performance. By analyzing six global public health crises between 1995 and 2021, we find that firms’ CSR performance declines following pandemic outbreaks. The results are robust across various regression models, alternative variable measures, and different sample constructions. In addition, we observe moderating effects of both formal and informal institutions on the observed negative impact. Finally, we highlight how pandemic outbreaks constrain the relationship between corporate social performances and investor attention. This study contributes to the literature on the effects of global crises on CSR performance and broadens understanding the roles played by formal and informal institutions.
By KungCheng Ho; Guangdong University of Finance and Economics
Presented by: KungCheng Ho, Guangdong University of Finance and Economics
Removing the Backstop or Cushioning the Fall? Bankruptcy Court and Local Government Bond Pricing Abstract This paper studies how legal institutions shape the pricing of local government credit. We exploit the staggered introduction of prefecture-level specialized bankruptcy courts in China to examine changes in the pricing of local government financing vehicle (LGFV) bonds. Following court specialization, LGFV bond credit spreads rise by about 7 percent both at issuance and in the secondary market. The evidence suggests that this repricing is associated with weaker implicit government guarantees and reduced reliance on contractual protections. The increase in credit spreads is more pronounced in fiscally constrained and bank-dependent regions, and for short-maturity and pulicly offered bonds. Furthermore, court specialization is associated with improvements in local employment and wages, consistent with broader reallocation effects. Overall, our study highlight the role of judicial effectiveness in shaping government credit markets, with broader implications for real economic activity.
By Mingmei Liu; Jinan University    Liyu Yang; Jinan University
Presented by: Liyu Yang, Jinan University
Real Sector Confidence Index and TEPAV Producer Survey: Wavelet Comovement of Public and Private Data Abstract This study aims to produce further thoughts for the ongoing debate of the usefulness of leading economic indicators from the nowcasting literature standpoint. Basically, it focuses on the effects and contributions of a leading economic indicator which is calculated and made public by a private corporation in the emerging market of Turkey. Turkish Economic and Political Research Foundation (TEPAV) collects information from producers in several different sectors of the Turkish economy through a survey that includes eight questions and an index value titled as the Retail Sector Confidence Index (TEPE) is derived for public use. The results are announced monthly and it is vital to test whether this index contains important information that is useful for both current and future economic stance from the producer perspective. So, the analysis of TEPE should help to understand if economic agents update their information sets and decide on their expectations of current and future consumption patterns and the general economic outlook considering TEPE a leading indicator. This study employs TEPE of TEPAV and compares it with similar survey data like Real Sector Confidence Index of the Central Bank of the Republic of Turkey (CBRT), the Capacity Utilization Index, the Industrial Production Index and the production part of the Survey of Expectations from the CBRT to check its validity. The data set is for January 2011 – February 2026. The methods employed are frequency-domain causality and wavelet comovement analysis. Our results show that TEPE contains important information that can be extracted for nowcasting the paths of output and consumption.
By Sadullah Çelik; Marmara University
Presented by: Sadullah Çelik, Marmara University
Office vacancy and corporate strategy transformation in the MENA region: evidence from post pandemic real estate markets Abstract The rapid expansion of remote and hybrid work arrangements has fundamentally altered the demand for office space worldwide, raising critical questions about the future of corporate real estate and the emergence of structural vacancy. While this transformation has been extensively documented in advanced economies, limited empirical evidence exists for the MENA region. This paper aims to analyze the determinants of office vacancy and examine how firms' evolving workplace strategies contribute to structural changes in commercial real estate markets across MENA economies. The aim of this study is twofold. First, it seeks to identify the macroeconomic and firm level drivers of office vacancy rates. Second, it assesses whether rising vacancy reflects cyclical fluctuations or deeper structural transformations linked to new corporate strategies, particularly the adoption of remote and hybrid work models. Building on recent contributions in the literature, including Gupta et al (2026), and Bergeaud (2021), the paper positions office vacancy as a key indicator of organizational and spatial restructuring in post pandemic economies. The empirical analysis relies on a novel panel dataset covering seven major metropolitan areas in the MENA region such as Dubai, Riyadh, Cairo, Casablanca, Doha, Tunis and Beirut over the period 2010-2024. The dataset combines multiple sources, including commercial real estate market reports (CBRE, JLL), and macroeconomic indicators from national statistical institutions and international databases. The dependent variable is the office vacancy rate at the city level. The main independent variables include the share of remote work adoption proxied by firm level and sectoral teleworkability indices, GDP growth, employment levels in service sectors, rental price indices, and new office supply. Additional control variables capture firm charecteristics like average firm size. Urban factors such as central business district attractiveness and transport accessibility are also included. We have also institutional features like the ease of doing business. The methodology relies exclusively on panel data econometrics. A fixed effects model is first implemented to control for time invariant heterogeneity across cities, allowing for consistent estimation of the determinants of vacancy. To account for persistence and dynamic adjustment in office markets, a dynamic panel model is then estimated, including lagged vacancy rates as explanatory variables. This specification captures inertia effects and delayed responses in supply and demand adjustments. Preliminary results indicate a strong and statistically significant relationship between proxies of remote work adoption and increases in office vacancy rates. Cities with higher exposure to teleworkable sectors exhibit larger and more persistent increases in vacancy following the COVID 19 shock. These findings are consistent with recent evidence by Arpit Gupta and Stijn Van Nieuwerburgh (2026), who document a structural decline in office demand driven by remote work adoption. However, the results also highlight important regional specificities. In Gulf countries such as the United Arab Emirates and Saudi Arabia, vacancy rates are partly driven by oversupply linked to large scale urban development projects. In contrast, in North African cities, vacancy appears more closely related to weak effective demand, economic volatility, and limited firm growth. These findings suggest that while remote work is a key driver, structural imbalances in supply and demand remain critical in explaining vacancy patterns. Furthermore, the analysis provides evidence of a "fight to quality" effect, whereby firms concentrate their demand on high quality, well located office buildings, leaving older and less adaptable assets increasingly vacant. This dynamic reinforces market segmentation and raises concerns about the long term obsolescence of certain segments of the office stock. The dynamic model further shows that vacancy rates exhibit persistence over time, indicating that adjustments in office markets are gradual and that shocks have long lasting effects, in line with the dynamic adjustment mechanisms highlighted by Glaeser,E.L& Gyourko, J (2025). This persistence supports the hypothesis that current vacancy patterns are not purely cyclical but reflect deeper structural transformations in corporate real estate strategies. The paper concludes that office vacancy in the MENA region should be interpreted as both a symptom of macroeconomic conditions and a manifestation of deeper organizational change. The persistence of high vacancy rates indicates that the commercial real estate sector is entering a new equilibrium characterized by lower space requirements and more flexible usage patterns. From a policy perspective, the findings highlight the need for adaptive urban planning and regulatory frameworks that facilitate the conversion and repurposing of underutilized office spaces. Encouraging mixed use development and reducing regulatory barriers to conversion could help mitigate the negative effects of prolonged vacancy.
By INES TROJETTE; ESPI PARIS    Nestor ODJOUMANI
Presented by: INES TROJETTE, ESPI PARIS
Institutional Quality and Economic Performance in the MENA Region: Evidence from a Governance‑Augmented Growth Model Abstract This study examines the pivotal role of governance in promoting long‑run economic growth in Middle East and North Africa (MENA) countries by integrating a formal theoretical framework with empirical analysis. Theoretically, the paper develops a governance‑augmented endogenous growth model in which government quality influences the rate of technological progress and capital accumulation. Governance enters the total factor productivity (TFP) growth equation through a governance‑dependent innovation parameter, implying that improvements in regulatory quality, rule of law, and corruption control raise the long‑run growth rate by accelerating productivity dynamics. To empirically evaluate these predictions, the study applies the Principal Component Analysis (PCA) approach to reduce the six‑dimensional Worldwide Governance Indicators (WGI) into a single composite governance factor, thereby addressing multicollinearity and capturing the shared institutional structure underlying governance in the MENA region. Using panel data and estimating fixed‑effects and system‑GMM models, the results show that the PCI‑based governance index exerts a statistically significant and economically meaningful effect on GDP per capita growth, even after controlling for investment, human capital, and external shocks. These findings confirm the theoretical model’s implication that governance is a core driver of productivity and long‑run economic performance. Overall, the study highlights that strengthening governance systems is essential for unlocking sustained growth in MENA economies, particularly those facing structural constraints and institutional fragility.
By I-Ming Chiu; Rutgers University-Camden    Noha Emara; Rutgers    Chengcheng Yue; Rutgers University-Camden
Presented by: I-Ming Chiu, Rutgers University-Camden
Session 7: Climate Change, Energy Transition, and Environmental Policy January 7, 2027 10:00 to 12:00
Session Chair: Pınar Deniz, Marmara University
Session type: invited
Words into Watts: Energy Security Sentiment and the EU Renewable Transition Abstract This paper extends the spatial analysis of renewable electricity generation (REG) in the EU by introducing a sentiment-modulated specification and a novel text-based dataset. We construct an EU Energy Policy Sentiment Database by applying ClimateBERT to a newly scraped corpus of European Commission RAPID press releases (2013-2024). We argue that the effect of electricity import dependence on REG is state-dependent: import exposure creates latent incentives for renewable deployment, but these incentives only translate into actual generation when political urgency is high. Our interaction-term specification explains the previously puzzling lack of robustness in the import dependence coefficient and provides a continuous measure of crisis intensity that improves upon simple post-2022 dummy approaches. We further test whether sentiment exhibits spatial spillovers across EU member states (the "Brussels Effect") and whether negative policy signals have disproportionate effects on REG (asymmetric response hypothesis).
By Alev Atak; Middle East Technical University (METU)    Pınar Deniz; Marmara University    Thanasis Stengos; University of Guelph
Presented by: Pınar Deniz, Marmara University
Does Stricter Environmental Policy Reduce Manufacturing Global Value Chains? Abstract This paper examines the relationship between environmental policy stringency (EPS) and manufacturing global value chains (GVCs) for 44 countries over the period of 1995–2022. Using a gravity-style specification estimated by Poisson pseudo-maximum likelihood, we show that the effects of environmental regulation depend on where stringency tightens. Our empirical results indicate that stricter EPS at the origin (partner) is associated with lower backward (forward) participation. These findings suggest that regulatory heterogeneity creates significant friction in global production networks. Heterogeneity by income level would be also pronounced in this paper as lax environmental regulations in developing countries may alter how EPS affects manufacturing GVC participation. For developing countries, stricter domestic EPS is positively associated with overall GVC integration and forward participation, implying that tighter environmental rules can induce cleaner production and improve compatibility with regulated supply chains. These results lend strong support to the "Porter Hypothesis" for developing countries, suggesting that environmental stringency acts as a catalyst for environmental upgrading rather than a mere cost burden. However, for developed countries, stricter domestic EPS is negatively associated with GVC participation and reduces backward participation, indicating a contraction of foreign-input-based fragmentation and a move toward shorter or more domestic-intensive supply chains. This negative effect also in line with the "Pollution Haven" hypothesis, where higher environmental compliance costs discourage the vertical integration required for backward GVCs in developed countries. Overall, these results imply that environmental policy stringency is a key determinant of how manufacturing GVCs are organised, rather than merely a non-tariff trade barrier. Therefore, policymakers should design and calibrate complementary environmental regulations as a strategic tool for higher manufacturing GVC participation and economic upgrading. More specifically, by enforcing cleaner and more standardized production processes, environmental regulation could also improve export quality with downstream production requirements in developing countries.
By Hüseyin Özer; Gebze Technical University
Presented by: Hüseyin Özer, Gebze Technical University
Announcing Without Delivering? Hydrocarbon Rents and the Maturation Gap in MENA Hydrogen Pipelines, 2020–2025 Abstract Announcing Without Delivering? Hydrocarbon Rents and the Maturation Gap in MENA Hydrogen Pipelines, 2020–2025 Hakan Bilgehan , Mahmut Tekçe The global low-emissions hydrogen economy entered its first phase of retrenchment in 2024–2025. The IEA's 2025 Global Hydrogen Review records a decline in potential 2030 production from announced projects, from 49 million tonnes per annum a year earlier to 37 million tonnes, with cancellations and delays concentrated in Europe, the Americas, Africa, and Australia. Against this global backdrop, MENA hydrocarbon exporters display a distinctive pattern that resists the dominant narrative. The IEA's September 2025 project database records 146 announced hydrogen projects across twelve MENA economies (up from roughly 63 at the end of 2022 and 117 at the end of 2024) yet only 10 of these 146 projects (6.8%) have reached final investment decision, construction, demonstration, or operation, compared with 22.9% globally. MENA pipelines are growing in volume while lagging in maturation. This paper asks whether hydrocarbon revenue, widely presumed to function as a transition buffer enabling rentier states to invest in post-oil futures, may simultaneously produce a "comfort effect" that sustains announcement activity without translating it into committed deployment. The argument extends classic resource-curse and rentier-state literatures (Beblawi and Luciani 1987; Karl 1997; Ross 2012) by reversing their typical mechanism: hydrocarbon rents do not crowd out diversification effort, but rather support its visibility while attenuating the commercial discipline required for execution. The paper builds on recent contributions to the political economy of Gulf petrostates (Hertog 2023) and on emerging work on the geographic reconfiguration of hydrogen markets (van de Graaf et al. 2020; IEA 2024). The empirical strategy uses two complementary analytical panels constructed from the IEA database. The first is a forward-looking target-year pipeline panel covering twelve MENA economies; eight hydrocarbon exporters (Saudi Arabia, UAE, Qatar, Kuwait, Oman, Bahrain, Algeria, Egypt) and four non-exporter comparators (Morocco, Mauritania, Jordan, Tunisia), across six target years from 2025 to 2030, yielding 72 country-year observations on cumulative pipeline intensity (project counts, electrolyser capacity in MW, and hydrogen output in kt/y). The second is a country-level cross-section capturing status distribution, technology mix, product composition, and capacity aggregates. Hydrocarbon revenue share of GDP, sovereign wealth fund assets relative to GDP, and national hydrogen strategy adoption are the primary explanatory variables; renewable resource endowment, water stress, fiscal balance, and governance indicators serve as controls. Revisions in European hydrogen import targets enter as period-level shocks, while the long-horizon demand-displacement signal from global electric vehicle diffusion is treated as an interpretive channel that helps account for the structural slack underlying the comfort effect rather than as a direct regressor. The paper estimates Poisson fixed-effects models for pipeline intensity and complements these with cross-sectional regressions for the maturation rate. We expect to find that hydrocarbon revenue and sovereign wealth fund capacity correlate positively with pipeline volume but negatively or insignificantly with the maturation rate, consistent with the comfort-effect hypothesis. We further anticipate that European offtake agreements, when present, partially offset this pattern by imposing commercial discipline through binding demand commitments. Three contrasting case studies illustrate the proposed mechanism: Saudi Arabia's NEOM (state-anchored flagship survival despite commercial uncertainty), Oman's cancelled Hydrom flagship projects (commercial failure under price-discovery pressure), and Egypt's Ain Sokhna cluster (announcement volume without maturation, in a context of weaker fiscal buffers). The paper contributes to three debates: the political economy of energy transitions in rentier states, the geographic reconfiguration of emerging hydrogen markets, and the policy design of fiscal supports for low-carbon industrial strategy in resource-dependent economies. Findings carry implications for international climate finance instruments, EU import-partnership conditionality, and domestic petrostate transition strategies. JEL Classification: Q42, Q48, O13 Keywords: hydrogen economy, energy transition, rentier states References: Beblawi, H., & Luciani, G. (Eds.). (1987). The Rentier State. London: Croom Helm. Hertog, S. (2023). Locked Out of Development: Insiders and Outsiders in Arab Capitalism. Cambridge: Cambridge University Press. IEA. (2024). Global Hydrogen Review 2024. Paris: International Energy Agency. IEA. (2025). Global Hydrogen Review 2025. Paris: International Energy Agency. Karl, T. L. (1997). The Paradox of Plenty: Oil Booms and Petro-States. Berkeley: University of California Press. Ross, M. L. (2012). The Oil Curse: How Petroleum Wealth Shapes the Development of Nations. Princeton: Princeton University Press. Van de Graaf, T., Overland, I., Scholten, D., & Westphal, K. (2020). "The new oil? The geopolitics and international governance of hydrogen." Energy Research & Social Science, 70, 101667.
By Hakan Bilgehan; Marmara University    Mahmut Tekce; Marmara University
Presented by: Hakan Bilgehan, Marmara University
Oil Income and Entrepreneurship in MENA: Conditional Evidence on Why Oil Wealth Does Not Foster Entrepreneurship Abstract Oil Income and Entrepreneurship in MENA: Conditional Evidence on Why Oil Wealth Does Not Foster Entrepreneurship #Motivation and Outline Entrepreneurship is widely acknowledged as a key engine of innovation, productivity, and inclusive economic growth. Yet in resource-rich economies, particularly the oil-dependent rentier states of the MENA region, this engine often remains underutilized due to structural and institutional distortions that are well-documented in the resource curse literature. This paper seeks to explore how oil income per capita shapes both the quality of entrepreneurial ecosystems and the actual entrepreneurial outcomes in MENA countries, focusing on the conditional roles of governance quality and digital transformation. While prior studies (e.g., Majbouri 2016; Farzanegan 2015) have highlighted the negative link between resource rents and entrepreneurial activity, systematic multi-country evidence for the MENA region remains limited, especially in light of recent policy shifts such as Saudi Arabia’s Vision 2030 and the UAE’s advanced digital strategies. This research aims to fill this gap by combining macro-level and individual-level data to analyze how oil rents interact with institutional and technological factors to affect entrepreneurial perceptions, new business formation, and innovation capacity. The paper will first review the theoretical debate on the resource curse and entrepreneurship, then present the empirical results from panel regressions and comparative case illustrations. The final sections will discuss implications for diversification strategies in MENA rentier economies and offer evidence-based policy recommendations. #Methodology and Analysis The central research question is: Under what conditions does oil income per capita support or hinder entrepreneurship in MENA rentier states? The main hypotheses to be tested are: (1) Higher oil income per capita is associated with weaker entrepreneurial outcomes; (2) Good governance quality and advanced digital infrastructure moderate this negative relationship, potentially turning resource rents into an enabling factor for entrepreneurship. To address these questions, the study uses an unbalanced multi-level panel dataset covering up to ten MENA oil-rich countries from 2015 to 2024. Core dependent variables include the Global Entrepreneurship Monitor (GEM) indicators (total early-stage entrepreneurial activity, perceived capabilities, fear of failure, social status of entrepreneurs) and the World Bank’s New Business Density. The key independent variable is oil income per capita, calculated following Ross (2014) using production and price data from the EIU and World Bank, adjusted to constant USD. Control variables include GDP per capita, trade openness, education, unemployment, and political stability. Governance quality (WGI data) and digital-high level of technology readiness (ITU and WIPO GII data) indices are incorporated as interaction terms. Methodologically, the paper employs fixed-effects and multi-level regression models to account for country-specific unobserved heterogeneity and to test cross-level interactions between national institutional factors and resource dependence. Robustness checks will make limited use of non-parametric methods, such as Random Forests, to verify variable importance and to complement the main panel regression results. Comparative case evidence, such as Saudi Arabia’s Vision 2030 and the UAE’s digital transformation, will illustrate how institutional and technology related innovation policy choices can alter the expected outcomes of the resource-entrepreneurship nexus. #Results and Conclusions Preliminary findings indicate that while oil rents may contribute to creating a more favorable business environment, this does not automatically translate into higher entrepreneurial activity or stronger perceptions of entrepreneurial feasibility without complementary institutional reforms and investment in digital infrastructure. This suggests that policy strategies focused solely on diversification without addressing governance quality and technological capacity may fail to unlock the entrepreneurial potential needed for long-term innovation and growth. By providing nuanced empirical evidence and clear country cases, this study will help policymakers better understand the conditional pathways through which resource wealth can support or suppress private sector dynamism in MENA economies. The paper intends to contribute actionable insights for governments aiming to align oil revenue management with entrepreneurial and innovation-led growth, which is directly relevant to the MEEA/ASSA’s mission of promoting evidence-based policymaking for inclusive and sustainable development in the region. JEL Classification: L26; O13; O53; Q33 / Key Words: Entrepreneurship, Oil, Innovation
By Ahrum YOO; Hankuk University of Foreign Studies
Presented by: Ahrum YOO, Hankuk University of Foreign Studies
Climate and Geopolitical Risks and Banking Sector Returns: Evidence from the G7, Emerging Economies and Middle East Abstract We wanted to figure out how two major global concerns—climate change and geopolitical risk— are impacting bank stock performance. Since these risks hit financial markets hard, both investors and policymakers need to understand the specific damage they cause. We gathered data on climate risk (using the Climate Risk Index from Notre Dame University) and geopolitical risk (from Caldara and Iacoviello, 2022). We tracked the annual stock returns of major listed banks across many countries from 1995 to 2023. Our analysis using OLS with fixed effects suggests that geopolitical risk significantly affects banks' sector stock returns globally. Political instability creates uncertainty, which makes investors demand a higher risk premium, ultimately pushing bank stock values down. Climate risk, in contrast, doesn't have such a powerful or consistent effect across different regions, which likely reflects its nature as a slower-moving, indirect threat to financial stability. When we performed analysis for different regions such as G7 economies and emerging economies, banks in developed G7 economies barely reacted to either climate or geopolitical risks, which points to their strong, resilient institutions. Emerging economies, however, showed much more scattered responses, though our model had limited success in explaining all those differences. We also included a few Middle Eastern (MENA) countries, but we consider those results preliminary due to limited data. To sum up, geopolitical risk is a major and complicated force shaping how banks perform, especially in places where institutions are weaker or constantly exposed to global uncertainty. Our study contributes to the literature by offering a cross-regional perspective that directly links these worldwide risk indicators to bank returns. For future work, we plan to increase the MENA dataset and explore more complex ways risk moves through financial systems.
By Aflatun Kaeser; Drexel University
Presented by: Aflatun Kaeser, Drexel University
Session 8: Banking, Financial Markets, and Systemic Risk January 7, 2027 12:30 to 14:30
Session Chair: Layal Mansour-Ichrakieh, American University of Kuwait
Session type: invited
Cross-Border Capital Flows and Systemic Equity Risk: A Panel Quantile Regression Approach Abstract This paper examines the cross-border capital flow-systemic risk nexus in selected developed and emerging countries. To achieve this objective, we develop an innovative method for measuring systemic risk by focusing on industry equity returns across countries. Building on the recent work of Zhang et al (2026), we capture the effect of cross-border capital flows along three dimensions: scale, direction and volatility and examine the role of capital flows on tail risk dynamics across industry returns from a large sample of global stock markets. In terms of methodology, we propose to use panel quantile regression. This stems from the fact that capital flows have been shown to have different effects across the tail of the distribution of stock market returns. The main hypothesis suggests that fluctuations, surges, and reversals in capital flow volatility have minimal impact during stable periods but become markedly more significant when systemic risk is high. Therefore, quantile techniques are particularly effective for identifying nonlinear patterns and tail risks that traditional fixed-effects models might underestimate. The expected contributions is threefold: (i) We provide a measure of systemic risk in the equity market by focusing on the industry returns across large sample of global stock markets; (ii) We introduce a distribution sensitive framework that identifies whether capital flows have different effect at various market (bear vs normal vs bull) conditions; (iii) We conduct a cross-country comparison (comparing advanced economies to emerging markets) to assess how systemic risk is affected by factors like global portfolio cycles, commodity shocks, and changing external financing conditions, which can amplify systemic stress. The sample includes Algeria, Brazil, China, Egypt, India, Indonesia, Malaysia, Morocco, Nigeria, Qatar, Russia, Saudi Arabia, South Africa, Turkey, Singapore, the United Arab Emirates, and the G7 countries, covering the period from January 1, 1990, to December 31, 2025. Among other findings, we show that cross-border capital flows significantly increase systemic risk with a higher magnitude reported for (i) emerging countries; (ii) bearish market conditions and (iii) capital outflows. The study concludes that regulators should prioritize macroprudential tools that dampen vulnerability during episodes of volatile cross-border flows. Also, emerging countries should develop a framework that relies less on cross-border capital flows.
By Mufutau Raheem; SAIT    Ibrahim Raheem; Southern Alberta Institute of Technology, Calgary, Alberta, Canada    Riza Demirer; Southern Illinois University Edwardsvillle    Valerie Yakubu; University of Louisville
Presented by: Mufutau Raheem, SAIT
Enter your slides (optional) Upload PDF file, 2 MB max No file chosen (Click here for tips on generating readable PDF files) Do you plan to attend this conference? Yes (regardless of whether this paper is accepted) No (but possibly if this paper is ac Abstract This study has investigated how Islamic financial development drives the attainment of SDGs and what the moderating role of AAOIFI adoption intensity is in this nexus. We assess the nexus between the Islamic Financial Development Index (IFDI) and 17 UNSDG performances, and explore how AAOIFI standard adoption influences this nexus, filling an important gap. Our dataset covers 58 countries with a focus on a sub-sample of 18 OIC countries over the period 2012–2024, the analysis applies two-way fixed effects and a staggered Difference-in-Differences framework to evaluate both direct and moderating effects. Our findings reveal that Islamic finance is a robust driver of SDGs, but its potency is context-dependent. Its impact in OIC countries is nearly double that of the global sample, proving the indigenous advantage of Shariah-compliant finance. Moreover, a significant internal divergence exists within the industry. While the Financial Performance and Knowledge pillars drive positive outcomes, the Governance and Sustainability dimensions often yield negative or insignificant impacts. This confirms a narrative-metric gap, where institutions prioritize symbolic legitimacy over substantive action. In addition to this study, the relationship between IFDI and SDG is not linear. Furthermore, the adoption intensity of AAOIFI standards acts as a decisive moderator. High implementation intensity bridges the institutional gap, successfully transforming the industry's ethical rhetoric into measurable SDG progress. Our findings offer policy implications for various stakeholders in the Islamic finance ecosystem, including Islamic banks, Islamic investment funds, Islamic insurance companies, sukuk issuers, Islamic microfinance institutions, and waqf and zakat authorities. First, standard-setters such as AAOIFI and IFSB should collaborate with national regulators to move beyond voluntary guidelines toward mandatory adoption of Shariah governance standards to ensure consistency and comparability across all types of Islamic financial institutions. Therefore, quantitative disclosure models should also be developed, requiring these institutions to report on indicators and targets rather than simply strategies. Second, regulators should encourage all Islamic financial institutions (banks, investment funds, takaful companies, and sukuk issuers) to integrate material climate risk analyses into their Shariah governance charters to accelerate progress toward SDG 13. Third, OIC member states should leverage Islamic finance and its various instruments as a key tool for achieving distributive social justice (SDGs 1, 2, and 6) by integrating Islamic financial instruments into their national sustainability roadmaps. Governments should also provide technical assistance and support to help emerging markets reach the critical investment threshold more quickly. Furthermore, governments should lead by example by issuing sovereign sukuk dedicated to national climate goals (SDG 13), which would create a benchmark effect that provides the necessary market depth and liquidity for the private sector, including Islamic banks, investment funds, and sukuk issuers. Fourth, policymakers should encourage the establishment of climate resilience waqf funds in collaboration with waqf institutions and Islamic finance organizations. Integrating the traditional waqf institution with modern climate infrastructure such as flood protection or reforestation can transform its currently minimal environmental impact into a significant social and environmental driver. Fifth, all Islamic financial institutions (banks, investment funds, takaful companies, and sukuk issuers) must move beyond mere symbolic legitimacy by aligning their corporate social responsibility activities with substantive societal needs and measurable SDGs outcomes, rather than focusing solely on improving their public image. This study acknowledges four major limitations. First, the study has not tested the threshold regime switching, beyond which a positive effect begins, which opens the door to threshold regression models. Second, the IFDI index does not reflect entirely the rapid development of Islamic financial technology, which calls for the inclusion of a global Islamic FinTech index in future studies. Finally, the study relied on country-level data, representing an opportunity for future scholars to explore the dynamics of the studied relationship at the micro level, with special attention to the heterogeneous dynamics among OIC and non-OIC countries.
By Rawnaa Ibrahim; HSE University
Presented by: Rawnaa Ibrahim, HSE University
Conventional vs. Islamic Banking under Financial Openness: Evidence from Saudi Arabia Before and After Vision 2030 Abstract This study examines the resilience and financial stability of Islamic and conventional banking sectors in Saudi Arabia before and after the economic reforms associated with Vision 2030. It is widely recognized that financial openness brings important economic benefits, such as improved capital allocation, increased foreign investment, and enhanced market efficiency, but it also increases exposure to external shocks through transmission and contagion effects. Accordingly, this study investigates which of the Islamic and conventional banking systems proves to be more resilient in the context of increased financial openness. Using MSCI indices representing Islamic and conventional banking, the analysis covers two distinct periods, pre-2017 and post-2017, capturing the gradual shift toward greater openness following the implementation of Vision 2030 reforms. Financial openness is proxied by a post-2017 dummy variable and measured using foreign portfolio investment inflows, foreign direct investment inflows as a percentage of GDP, stock market openness through foreign participation in the Saudi Stock Exchange (Tadawul), and a financial openness index such as the Chinn-Ito (KAOPEN) index. The study employs GARCH models to assess volatility dynamics and T-tests to evaluate differences in returns and risk between the two systems. The findings provide evidence on which banking system is more resilient to financial openness and identify the transmission channels through which external shocks affect each system in a transforming economy.
By Layal Mansour-Ichrakieh; American University of Kuwait    George Jabbour; The George Washington University
Presented by: Layal Mansour-Ichrakieh, American University of Kuwait
Retail demand and the pricing of extreme losses Abstract The pricing of extreme negative returns remains a contested issue in behavioral asset pricing. While some investors may extrapolate past performance into the future and demand a premium for bearing downside risk, others may hold on to or even accumulate losing stocks, resulting in overvaluation. Yet whether retail investors are net buyers or sellers after sharp losses, and which specific segments of retail investors predominantly account for this behavior, remain open questions. In this paper, contrary to the recent evidence for U.S. markets, we observe that stocks experiencing the most extreme daily losses (MIN) in Borsa Istanbul subsequently earn statistically and economically significant lower returns. Our findings, however, are in line with the systematic overpricing of left-tail risk. The $MIN$ discount becomes more pronounced under short-selling restrictions, potentially due to limits to arbitrage. Moreover, leveraging daily portfolios of 20,000 investors, we provide evidence that Turkish retail investors, on average, are net buyers following minimum return days, particularly for stocks with the most extreme negative returns (High-MIN stocks). This behavior, driven primarily by young, male, domestic, and less diversified investors, may reinforce the persistence of overvaluation. Our results, therefore, offer a potential mechanism for the left-tail risk anomaly in equity markets, particularly pronounced among stocks with high retail investor participation.
By Murat Tiniç; Middle East Technical University    Ahmet Sensoy; Bilkent University    Irem Dastan; Kadir Has University
Presented by: Murat Tiniç, Middle East Technical University
Systemic Risk in Emerging Markets: A Hybrid FNETS–FRM–LSTM Approach with Evidence from Türkiye and Implications for MENA Economies Abstract This paper proposes a novel three-stage hybrid framework for the dynamic measurement and forecasting of systemic risk in the Borsa Istanbul (BIST) financial network. Situated at the intersection of financial econometrics and machine learning, the framework integrates Factor-adjusted Network Estimation and Forecasting (FNETS), the Financial Risk Meter (FRM), and Long Short-Term Memory (LSTM) deep learning architecture. Turkiye serves as the primary laboratory given its role as a bridge economy connecting European, Central Asian, and MENA financial markets. Its financial system exhibits structural vulnerabilities—including chronic current account deficits, elevated exchange rate volatility, and high sensitivity to global risk appetite—that closely parallel the institutional and macroeconomic profile of major MENA emerging markets. The findings are therefore expected to carry direct methodological and policy implications for MENA economies seeking to build early warning systems for financial instability. Motivation and Research Gap. The 2008 Global Financial Crisis demonstrated that standard network models and linear econometric frameworks systematically underestimate systemic risk in periods of tail co-movement. Two structural deficiencies drive this underestimation. First, conventional VAR-based connectedness measures fail to disentangle institution-specific (idiosyncratic) shock transmission from market-wide co-movement driven by common macroeconomic factors such as global interest rate changes, exchange rate shocks, and shifts in risk appetite. The resulting network topology is artificially dense and filled with spurious links, making genuine contagion channels impossible to identify. Second, static risk measures provide a backward-looking snapshot of systemic stress without capturing the nonlinear, memory-dependent dynamics that characterize crisis propagation. In emerging markets such as Turkiye and the MENA region, where macroeconomic volatility is structurally elevated, these deficiencies are particularly acute. This paper addresses both gaps simultaneously through a unified hybrid pipeline. Methodology In the first stage, the FNETS methodology of Barigozzi, Cho, and Owens (2023) is applied to the high-dimensional return matrix. Dynamic Principal Component Analysis (DPCA) decomposes each return series into a common component—driven by pervasive macroeconomic factors—and an idiosyncratic residual capturing institution-specific dynamics. Sparse VAR networks are then estimated on the idiosyncratic residuals via Lasso penalization, yielding a purified adjacency matrix that reflects genuine bilateral Granger-causal linkages free from factor-driven co-movement. Network topology metrics including in-degree, out-degree, and betweenness centrality are computed for each institution at each point in time. In the second stage, the Financial Risk Meter (FRM) of Mihoci, Althof, Chen, and Härdle (2020) is applied to the FNETS-purified series. For each institution j, a linear quantile Lasso regression is estimated at the τ = 0.05 left-tail level using a 63-trading-day rolling window with macroeconomic conditioning variables. The optimal penalization parameter λⱼ is selected via Generalized Approximate Cross-Validation (GACV; Yuan, 2006), which remains consistent in the high-dimensional case where parameters exceed the window size. The aggregate FRM equals the cross-sectional mean of λⱼ values, while the institution-level distribution identifies high co-stress entities and activators—institutions whose returns systematically enter the active sets of many other firms during stress periods. In the third stage, FNETS topology metrics and the rolling FRM lambda series serve as structured input features for a Bidirectional LSTM (BiLSTM) architecture. Unlike models trained on raw returns, this LSTM learns from econometrically refined risk signals that isolate genuine contagion dynamics. The architecture comprises a BiLSTM layer, a unidirectional LSTM layer, batch normalization, and a fully connected output layer, trained with early stopping and adaptive learning rate scheduling. The model produces multi-horizon forecasts of the aggregate FRM at h = 1, 5, 10, and 22 trading days ahead. Expected Results and Contributions The study is expected to yield four principal contributions. First, FNETS purification should substantially reduce network density relative to standard Lasso-VAR approaches, revealing a sparser and economically more interpretable contagion topology within BIST. Second, the FRM index is expected to peak sharply around documented Turkish financial stress episodes, including the 2018 currency crisis, the COVID-19 liquidity shock of March 2020, and the unorthodox monetary policy period post-2021, validating the measure's sensitivity to tail co-movements in an emerging market context. Third, the LSTM module is hypothesized to achieve superior out-of-sample predictive accuracy—measured by RMSE, MAE, and directional accuracy—relative to DCC-GARCH, static quantile regression, and feedforward neural network benchmarks, owing to its ability to learn nonlinear crisis memory from structured econometric features. Fourth, the activator analysis should identify a compact set of systemically important institutions whose tail risk propagation drives aggregate BIST stress, providing actionable intelligence for the Banking Regulation and Supervision Agency (BRSA) and the Central Bank of Turkiye (CBRT) for macro-prudential policy design. From a MENA perspective, the structural parallels between Turkiye's financial vulnerability profile—high external financing needs, dollarized liabilities, and sensitivity to global risk sentiment—and those of frontier and emerging MENA markets make the FNETS–FRM–LSTM pipeline a directly transferable methodological template. The framework can be applied to Gulf Cooperation Council equity markets, North African banking systems, or cross-border MENA sovereign bond networks, offering regional regulators a dynamic, data-driven early warning infrastructure grounded in rigorous econometric theory. References Adrian, T. & Brunnermeier, M.K. (2016). CoVaR. American Economic Review, 106(7), 1705–1741. Barigozzi, M., Cho, H. & Owens, D. (2023). FNETS. Journal of Business & Economic Statistics, 41(3), 874–887. Mihoci, A., Althof, M., Chen, C.Y-H. & Härdle, W.K. (2020). FRM Financial Risk Meter for Emerging Markets. Emerging Markets Review, 43, 100684. Tibshirani, R. (1996). Regression Shrinkage and Selection via the Lasso. JRSS-B, 58(1), 267–288. Yuan, M. (2006). GACV for Quantile Smoothing Splines. CSDA, 50, 813–829.
By Onur Polat; Hacettepe University
Presented by: Onur Polat, Hacettepe University
Session 9: Sovereign Risk, Crisis Recovery, and Applied Methods January 7, 2027 12:30 to 14:30
Session Chair: Hussein Zeaiter, Lebanese American University
Session type: invited
Extreme Bounds of Sovereign Defaults, Evidence from the MENA Region Abstract This paper investigates the determinants of sovereign debt defaults using Leamer’s (1983) Extreme Bounds Analysis (EBA). The EBA approach is applied for 18 countries in the MENA region over the period 1970-2024 to determine whether many economic and political factors are “robust” or “fragile”. This study finds that debt accumulated arrears can be perceived as an early signal for default and alarm MENA countries to prevent total failure or at least alleviate the severity of the default. This paper would be important for the policy makers in the MENA region to use in order to reduce the probability of default. Many recommendations are given to the indebted MENA countries should (1) attract more foreign reserves through adjusting domestic policies and regulations of investment, (2) have proactive fiscal policies, and (3) Fight corruption and enhance democracy.
By Hussein Zeaiter; Lebanese American University
Presented by: Hussein Zeaiter, Lebanese American University
Accountability Asset Recovery: Inside Baseball Abstract According to Merriam Webster's Dictionary, the term "inside baseball" refers to a style of play in baseball that emphasizes strategy. It has been in use since the 1890s and has evolved into a metaphor for discussing intricate details and insider knowledge about a subject, often used in contexts beyond sports, such as economic endeavors involving international policy makers and financial institutions. Accountability Asset Recovery: Inside Baseball employs the phrase in the context of the dirty tricks of organization behavior, liars and the lies they tell in pursuit of economic gain. States of the MENA acting in good faith, joined the United Nations Convention Against Corruption of 2003, the UN CAC, indeed along with all other states and non-state parties unwittingly, or possibly something more complex. The convention opened for signing in December 2003 and went into effect in December 2005 and is ripe for a stock take of practices and unintended consequences. Accountability Asset Recovery: Inside Baseball engages in a systematic literature review to identify the lengths that research has thus far gone to elucidate, identify and even capture asset recovery in the context of UN CAC Article 39. Systematic reviews are designed to minimize bias and provide reliable evidence by following a predefined, explicit methodology. Unlike narrative reviews, which may be selective or subjective, systematic reviews use rigorous procedures to ensure transparency, reproducibility, and comprehensive coverage of the literature. UN CAC Article 39 obliges States Parties to encourage cooperation between national investigating and prosecuting authorities and private sector entities — including financial institutions — in matters involving offences under the Convention. The two core obligations that define the article are the promotion of collaboration between national authorities and entities in the private sector and for states to encourage their nationals and other persons resident in the territory to report to national authorities when they might become aware of possible offences under the convention. Outcomes of this literature review include evidence of information asymmetry, limited academic interest in the subject matter and over interest in the subject matter by participating firms and niche research specialists, financial and banking instability and the over consolidation of economic participation. One compelling historic precursor underpinning the overall direction of the systematic literature review being the Law & Economics proponents from Stanford University in California in the USA during the 1980s.
By Monika Sheldon-London; Alpha FTS
Presented by: Monika Sheldon-London, Alpha FTS
The lack of Sharia compliant tools for post conflict banking recovery Abstract The lack of Sharia compliant tools for post conflict banking recovery The unstable and complicated political, social and economic context of Islamic middle east countries has Led to a persistent fragility in banking system, the current rising intensification of issues in the middle east, in addition to the absence of scholarly work that concerned with the banking recovery within an Islamic context, emphasizes the need for a suitable framework. Driven by this need, this paper is intended to evaluate the efficiency and adequacy of Sharia compliant policy tools in banks reform and monetary objectives transmission in post conflict economics, in contrast with conventional tools. The paper will identify the tools within each of the respective financial systems to identify the gab, and what is lacking in Islamic financial system, and consequently formulate a suggested recovery model that can applied on Sudan as a current post conflict case. The study will be conducted applying a comparative study methodology on Islamic financial systems in contrast with a conventional financial system. Yemen and Somalia will be used as the previous cases for a post conflict Islamic financial system; in order to infer the lesson learned, and Rwanda will be the successful conventional example to identify the missing strength areas in Sharia compliant tools, also Malysia experience in Islamic finance innovation will be referred to. A quantitative and a qualitative analysis will be conducted using data from the selected countries’ central banks reports, IMF, World Bank reports and the prior relevant work. Based on their specific features, the results are expected to highlight the gab in the responsiveness of the Sharia compliant tools, and its strength in maintaining financial, and economic sustainability. That results are expected to reflect the lack of urgent liquidity Sharia compliant tools in addition to the absence of sharia compliant debt handling mechanism such as specialized companies in debt management. Another expected result is that, the shortage of effective Sharia compliant tools is not a consequence of the Islamic finance structure or requirements, rather it is attributable to the scarcity of innovation in Islamic finance, because of the scarcity of scholars who are knowledgeable of financial needs and innovation. The conclusion of the paper will present a suggested frame work that is anticipated to offer the conventional tool responsiveness while maintaining the sustainability of the Sharia compliant tools
By Sarra Ahmed; University of khartoum DBA program student
Presented by: Sarra Ahmed, University of khartoum DBA program student
A Model Confidence Set for Learner Selection in Generic Machine Learning with Application to Business Lending in Egypt Abstract Generic Machine Learning (Chernozhukov et al., 2025a) provides valid inference on heterogeneous treatment effects using any machine learning algorithm to proxy the conditional average treatment effect, but offers limited guidance on which learner’s results to report when multiple learners are employed. Existing reporting practice typically defaults to ad hoc selection of a top-performing learner or to a Bonferroni correction across all candidates, neither of which adapts to the actual informativeness of the data. I propose applying the model confidence set of Hansen et al. (2011) to the split-level goodness-of-fit values produced by GML, yielding a data-driven set of learners whose performances are statistically indistinguishable. Inference then proceeds over this set rather than the full collection of candidates, with overall coverage controlled by a two-stage budget-splitting argument. Monte Carlo simulations show that the procedure controls size, sacrifices little power relative to naive selection, and exposes meaningful variation in point estimates across equally credible learners that is invisible under standard reporting. In an application to the lending experiment of Bryan et al. (2024), formal learner selection recovers a significant boost in profits for the top quartile of firms at the conventional 90% level that is otherwise lost to multiplicity correction across candidate learners.
By Pierce Plucker; Oklahoma State University
Presented by: Pierce Plucker, Oklahoma State University
Asymmetric Spillovers from the USA and China to MENA Frontier Markets: Evidence from Jordan and Turkey Abstract The rise of China as a global financial power has prompted renewed debate over whether emerging and frontier markets are shifting their gravitational axis away from the United States. The financial dimension of this great-power competition — reflected in shifting equity market correlations, cross-border capital flows, and investment linkages — has been extensively studied for large emerging economies such as the BRICS, yet the MENA region remains significantly underexplored. This paper addresses that gap by investigating the dynamic equity market linkages between the United States and China on one side, and Jordan and Turkey on the other — two strategically situated MENA economies at the crossroads of Europe, the Middle East, and Asia whose global financial integration remains poorly understood despite their regional significance. The central question is whether Jordan and Turkey respond symmetrically to equity market signals from the two global poles, or whether the nature and intensity of dependence differs substantially — both across countries and across time. The hypothesis of asymmetric dependence reflects the structural differences between the two markets: Turkey, as an upper-middle-income economy with a large and relatively liquid stock market and deep trade and financial ties with Europe and the Gulf, is expected to exhibit stronger and more volatile conditional correlations with the US market, with Chinese influence growing particularly in the post-2015 period coinciding with expanding Belt and Road Initiative engagement. Jordan, as a smaller frontier market with a more insular financial system, is hypothesized to display lower overall correlations with both global poles but with idiosyncratic sensitivity to regional geopolitical shocks that may intermittently amplify its dependence on one or the other. The empirical analysis combines two complementary frameworks. First, the Dynamic Conditional Correlation GARCH (DCC-GARCH) model, originally proposed by Engle (2002), is employed to capture time-varying bilateral correlation dynamics between each MENA market and the two global poles across distinct crisis regimes. Second, a Vector Autoregression (VAR) framework is employed to examine the direction and magnitude of shock transmission from the USA and China to Jordan and Turkey, using impulse response functions (IRFs) and forecast error variance decomposition (FEVD); the VAR is identified using a standard Cholesky decomposition ordered as USA → China → Turkey → Jordan, consistent with the hierarchical hypothesis that hegemonic markets drive peripheral ones. All price series are transformed into log returns to ensure stationarity. Together, DCC-GARCH establishes the correlation structure while VAR identifies causality — providing a unified empirical basis for assessing whether US or Chinese equity market shocks exert dominant and persistent effects on MENA frontier markets, and whether that dominance has shifted over time. The analysis uses daily total return indices from the MSCI database — covering MSCI USA, MSCI China, MSCI Jordan, and MSCI Turkey — over the period January 2001 to April 2026, structured around three sub-periods: the pre-Global Financial Crisis period (2001–2007), the post-GFC consolidation period (2009–2019), and the pandemic and post-pandemic period (2020–2026). This periodization enables a systematic assessment of whether MENA frontier markets have undergone a measurable reorientation toward Chinese equity market signals, consistent with the broader geopolitical realignment underway across the region. The paper makes three contributions. First, it addresses a significant gap in the MENA financial integration literature, where existing studies overwhelmingly focus on Gulf Cooperation Council markets or aggregate regional indices, leaving Jordan and Turkey comparatively understudied. Second, by combining DCC-GARCH with VAR-based causal analysis along the explicit US–China competition axis, the paper connects equity market dynamics to the broader geopolitical contest for economic influence in MENA — a question of direct relevance to regional policymakers managing reserve portfolios, capital account strategies, and bilateral financial agreements. Third, the country-level asymmetry findings carry practical implications for international portfolio investors: if Jordan and Turkey exhibit differential co-movement with and causal sensitivity to the two global poles, these markets may serve complementary diversification roles, particularly during periods of heightened US–China financial decoupling.
By Atsuji Ohara
Presented by: Atsuji Ohara,
Session 10: Poverty, Inequality, Food Security, and Development January 7, 2027 12:30 to 14:30
Session Chair: Moamen Gouda, Hankuk University of Foreign Studies
Session type: invited
When Religion Shapes Redistribution: Islamic Economic Provisions and Income Inequality Abstract This study examines how constitutionally embedded Islamic economic principles—Islamic economy declarations, zakat provisions, and riba bans—affect income inequality in OIC countries (1980–2019). Using novel disaggregated constitutional data (Gouda, 2026) merged with the World Inequality Database, we estimate correlated random-effects panels with Driscoll–Kraay errors. Results show heterogeneous effects after the Arab Spring: economy declarations and zakat provisions are associated with higher top-income shares and compressed middle and lower shares in Arab states, suggesting elite capture, while riba bans reduce inequality and increase bottom-income shares across the OIC. Non-Arab OIC countries display more equalizing effects. Findings highlight constitutional provisions as distributional forces shaped by institutional context.
By Moamen Gouda; Hankuk University of Foreign Studies    Mahmut Akarsu; Pusan National University
Presented by: Moamen Gouda, Hankuk University of Foreign Studies
How Urbanization Shapes Food Security in Middle East and North Africa? Abstract Urbanization represents a transformative demographic and spatial shift with significant implications on the different dimensions of food security, poverty and other development goals. Urbanization can generate both positive and negative effects, depending on the pace of growth, the quality of planning, and the inclusiveness of urban development (Wei et al, 2025). As a challenge, poverty is shifting from rural to urban areas and food insecurity symptoms as obesity and overweight persist in urban areas, with undernutrition and micronutrient deficiency (Ruel et al, 2017). Urbanization exerts pressure on food availability dimension of food security through its negative impact on agriculture efficiency and increasing the competition on limited resources as land and water (Zhuang et al, 2022; Ye et al, 2025). For food utilization dimension, the change in lifestyle, due to urban growth, increases demand of animal-based, energy-dense and processed food (Abu Hatab et al, 2019). Nevertheless, urban growth can be considered as an opportunity for food security. With urbanization, high technical and capital investment increase agricultural efficiency and farmers income. Access to economic opportunities increases with urbanization, resulting in higher income for poor households and increase economic access to food (Li and Li, 2018). Additionally, there is a positive potential of urban agriculture on urban food diversity, urban households’ income and women empowerment (Zezza and Tasciotu, 2010). Food security is a persistent challenge constraining the development agenda of the net food importer countries in the MENA region. In 2023, around 12% of the population in the region are undernourished (World Development Indicators, 2026). At the macro level, food security is constrained by increasing population, water and land scarcity, and climate change. Factors that are expected to be deteriorated by urbanization. Using a panel data for 12 MENA countries during the period from 2000 to 2020, Ibrahim and Ramadan (2025) show that food security in the region is highly affected by water scarcity, drought, urbanization, and population growth. The MENA region is considered as the most urbanized region worldwide. In 2050, the percentage of population living in cities is expected to rise to 68% (GIZ, 2023). Consequently, the higher rate of urbanization might put more pressure on food security, affecting its different dimensions, availability, accessibility and utilization. The gap between food supply and food demand in the region is covered by food imports. Cereal imports represent more than 50% of the region’s cereal consumption. The high dependence on food imports increases the vulnerability of food security to any external shocks as pandemics, wars and conflicts or any global economic shock. Against this backdrop, the question to ask is: “How Urbanization Shapes Food Security in Middle East and North Africa?” The literature focuses on the impact of urbanization on food availability (Badreldin et al, 2019; Radwan et al, 2019). However, food economic access and food utilization might be affected by urbanization as well. Urban growth changes the dietary habits and increases consumption of processed products negatively affecting the nutritious status of urban households, mainly children. Yet, urbanization might affect positively food security by increasing the economic access to food through higher income and access to programs as food subsidies and increasing access to services as clean water and sanitation. The proposed paper aims to overview the dynamics of urbanization and its impacts on food security dimensions over the period from 2000 to 2024. Using data from the World Development Indicators and FAOSTAT, the paper studies the evolution of the urban population and its impact on food availability, food access and food utilization. Food availability is measured by agriculture production. Food access will be measured using poverty rate and food expenditure. While food utilization is measured using the prevalence of severe food security and malnutrition. The variable of interest, urbanization, is measured by the proportion of urban population. The analysis will control for other drivers of food security as climate change, inflation, food subsidies and food trade balance. To consider the global development context, the situation of the region will be compared to other developing countries, mainly in Africa. Such analysis is required to provide valuable insights for policymakers, to ensure the continuity of the urban development process while controlling for the negative drawbacks and benefiting of the potential opportunities for food security.
By Racha Ramadan; Faculty of Economics & Political Science
Presented by: Racha Ramadan, Faculty of Economics & Political Science
Middle Class and Vulnerability to Poverty in Egypt Abstract Given the importance of the Middle Class in stimulating inclusive growth and a prosperous society, this paper analyzes the size, profile, and trend of Egypt’s Middle-Class. It draws on relevant literature to define the Middle-Class as those with economic security and not prone to vulnerability to poverty. We describe the profile of Egypt’s Middle Class and four other socioeconomic classes. Middle-class households in Egypt are more likely to be older and live in urban areas, have a college degree and job in the formal sector than are the heads of Poor and Vulnerable households. Middle-Class households typically enjoy a smaller household size, better access to digital technology, and a greater likelihood of asset ownership than Poor and Vulnerable households. The paper also finds that the share of the Egyptian Middle Class is relatively low compared to other middle-income countries, and this size did not expand between 2015 and 2021. By 2021, income inequality within the Middle-Class rose by 6.5 points, signaling increased income disparity. The rise was sharper in urban areas than in rural ones, emphasizing a growing gap among urban Middle-Class earners, possibly due to changes in jobs, education access, or economic conditions. Egypt's inclusive growth depends on expanding its Middle Class, which means improving economic security for those vulnerable to various shocks. Key policies should include adaptive social protection, price stabilization, food security measures, and a strong geographical approach to target policies. Expanding and protecting the Middle Class also requires building physical and human capital and increasing job opportunities.
By Imane Helmy; World Bank
Presented by: Imane Helmy, World Bank
Gender Bias in TA evaluation Abstract This study examines whether gender bias influences how students evaluate their teaching assistants (TAs). Using administrative, individual-level data on freshman students and TAs at a large public university in California from Fall 2016 to Summer 2025, we test whether students assign different evaluations based on gender match. Leveraging within-course variation in TA assignment, we isolate the causal effect of student–TA gender congruence while holding course content and structure constant. We find evidence of a statistically significant same-gender effect in teaching evalua- tions. Female students rate female TAs approximately 0.17 standard deviations higher relative to male students rating male TAs. The results are robust when focusing on the fall quarter of freshman year, excluding COVID-affected terms, and restricting the sample to courses with a single TA. These findings suggest that gender congruence meaningfully shapes student evaluations and highlight the role of in-group bias in aca- demic assessment contexts.
By Radhika Bansal; UCR
Presented by: Radhika Bansal, UCR
The Impact of Farmer-to-Farmer Extension on Adoption of Agricultural Practice in the West Bank of Palestine Abstract Agricultural extension services are critical for promoting the adoption of improved farming practices, particularly in developing and conflict-affected regions where public extension systems often face severe resource constraints. With limited access to credit and lack of insurance, with uncertainty in weather conditions and price of output, most farmers behave risk-averse, not maximizing their income but family’s chances to survive. They are rather reluctant to shift from traditional subsistence to modern advanced technology. Palestinian farmers under the occupied territories are typical case where severe uncertainty with geographical, environmental and political constraints. Despite several constraints, some farmers adopted new technology and tried shifting out of subsistence agriculture by the interaction of farmers. In such contexts, farmer-to-farmer extension may provide a cost-effective mechanism for knowledge diffusion through peer learning and social interaction. This study examines whether farmers can effectively teach other farmers and facilitate the adoption of agricultural practices in the West Bank of Palestine. Using household-level data drawn from the 2020 Agricultural Census published by the Palestinian Central Bureau of Statistics (PCBS), we analyze farmers’ adoption decisions regarding multiple agricultural practices. We first estimate a multinomial logit model to identify the determinants associated with the adoption of different agricultural practices. To account for contextual factors affecting adoption decisions, we control for Israeli movement restrictions and conflict-related disturbances, as well as changes in local weather conditions. Then, we examine the effect of extension services extended by farmers on adoption outcomes. Because farmers’ participation in peer networks and adoption decisions may be jointly determined, simple correlations may suffer from selection bias and endogeneity. To address this issue, we employ a two-stage least squares (2SLS) approach, using locality-level adoption rates as an instrumental variable for farmers’ exposure to social learning and peer extension. Our findings provide evidence on the role of farmer-to-farmer extension in promoting agricultural practice adoption under conditions of institutional constraints and political instability. The study contributes to the literature on agricultural extension, social learning, and technology diffusion in fragile settings, offering policy implications for scalable and low-cost extension strategies in Palestine and other conflict-affected regions.
By Kenichi Kashiwagi; Economics    Amin Abu-Alsoud; University of Tsukuba    Tomoki Nakamura; Nippon Koei Co. Ltd.
Presented by: Kenichi Kashiwagi, Economics

 

This program was last updated on 2026-08-26 07:37:00 EDT