Arab Monetary Fund

This paper investigates the impact of net capital inflows on credit to the private sector as a share of gross domestic product. It tries to assess to what extent net capital inflows could lead to excessive credit growth and, hence, undermine financial stability. The pooled mean group for the cointegration method is employed in this paper. The results show that net capital inflows may have a negative long run impact on financial stability in the Arab countries through increasing credit growth. With different types of capital inflows, the implications on financial stability differ.

This paper presents an analysis of the relationship between the governance of financial stability and the communication policy of Central Banks in the Arab region, and their effectiveness in reducing the fluctuations of the financial cycle in twelve Arab countries during the period (2005-2020).