This website uses cookies.

By clicking the "Accept" button or continuing to browse our site, you agree to first-party and session-only cookies being stored on your device to enhance site navigation and analyze site performance and traffic. For more information on our use of cookies, please see our Privacy Policy.

  1. Home
  2. ASSA Annual Meeting
  3. 2024
  4. Program
  5. Finance and Financial Markets in the MENA Region
« Back to Results

Finance and Financial Markets in the MENA Region

Paper Session

Saturday, Jan. 6, 2024 12:30 PM - 2:15 PM (CST)

Convention Center, 222
Hosted By: Middle East Economic Association
  • Chair: Ahmed Elsayed, United Arab Emirates University

Disentangling the Impact of Financial Literacy on Behavior: Does Financial Literacy Increase Patience?

Khusrav Gaibulloev
,
American University-Sharjah
Gerel Oyun
,
Independent
Dina Tasneem
,
American University-Sharjah
Ajalavat Viriyavipart
,
American University-Sharjah

Abstract

Using a lab-in-the-field experimental design with 450 cleaning service workers in the United Arab Emirates, the study examines the causal effect of financial education on time preferences. We disentangle the pathways that link financial literacy to financial conduct by exploring two possible mechanisms: improved numerical skills and greater financial awareness. To do so we divide participants into a control group and two treatment groups, with one receiving financial literacy training and the other receiving numeracy training. The experiment uses incentivized tasks to elicit individual preferences towards time. We account for common criticisms of using monetary discounting tasks to obtain time preferences, by applying non-monetary tools in addition to traditional monetary incentives. Initial results suggest that financial literacy causes change in time preference by making people more patient. This is not the case for numeracy. The results shed light on how education can shape preferences in decision-making.

Oil Price Shocks and the Profitability of Factor Investing Strategies in Global Stock Markets

Riza Demirer
,
Southern Illinois University-Edwardsvillle

Abstract

Factor investing strategies have been increasingly popular in the finance industry. These strategies exploit predictability patterns associated with common firm-level characteristics with the goal of improving portfolio returns and enhancing diversification. Against this background, this paper takes a novel approach to the relationship between oil prices and stock market dynamics by exploring the effect of disentangled oil price shocks on factor premia in a large set of 62 stock markets that includes developed, emerging, frontier as well as oil importing and exporting economies. Our findings show that oil market shocks capture significant predictive information regarding the size and direction of risk premia in global stock markets although we observe a great deal of heterogeneity in the response of risk premia to these shocks, depending on the market classification and the type of oil shock. In general, oil supply and inventory demand shocks are found to have the greatest impact, particularly on momentum and value in global stock markets. While oil supply shocks resulting from production disruptions and precautionary demand shocks negatively affect momentum in developed markets, these shocks are found to drive the value premium in these countries, highlighting the informational value of these shocks regarding increased market stress. Similarly, these shocks drive the size and value premia in emerging markets as rising risk aversion by investors drives the required returns associated with these firm characteristics. Interestingly, when we compare major importing and exporting nations, we find that while oil demand shocks serve as the main driver of risk premia in these markets, these shocks have opposite effects on the two country groups with oil demand shocks positively (negatively) predicting risk premia in importing (exporting) nations.

Oil Shocks and Financial Stability in MENA Countries

Ahmed Elsayed
,
United Arab Emirates University

Abstract

We examine the link between financial stress and three sources of commodity fluctuations in
MENA countries, namely: (i) oil demand shocks; (ii) oil supply shocks; and (iii) (financial) risk shocks. To do so, we use a novel quantile coherency approach and daily data for 11 MENA countries over the period September 21, 2006 – August 19, 2021, thus, improving upon the existing studies that typically rely on single-frequency and time-frequency dependence. As a result, we are able to capture both varied market conditions and different investment horizons. We find that financial stress is particularly acute during extreme oil demand and oil supply shocks, especially at longer horizons. By contrast, (financial) risk shocks appear to be more prominent in generating financial stress at relatively shorter horizons and regardless of the quantiles of the distribution. This empirical evidence can have strong implications for policymakers in the region, as well as portfolio managers.

Discussant(s)
Mehmet Balcilar
,
Eastern Mediterranean University
Ahmet Faruk Aysan
,
Hamad Bin Khalifa University
Khusrav Gaibulloev
,
American University-Sharjah
Riza Demirer
,
Southern Illinois University-Edwardsvillle
Ahmed Elsayed
,
United Arab Emirates University
JEL Classifications
  • G1 - General Financial Markets
  • G2 - Financial Institutions and Services