Mohieldin, Mahmoud (1995) On financial liberalisation in LDCs : the case of Egypt, 1960-93. PhD thesis, University of Warwick.

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Abstract

This thesis deals with the issue of financial development in Egypt at the sectoral,
macroeconomic and household levels over the period 1960-93. The thesis is organised in
ten chapters, including a summary of the main results in chapter (10).
Chapter (1) provides an introduction of the topics treated in the thesis and an overview of
the main developments in the Egyptian economy during the study period.
Chapter (2) reviews the theoretical literature and empirical studies on the main issues
concerning financial development.
Chapters (3) and (4) derive stylised facts from the discussion of the evolution of the
financial system in Egypt. Chapter (3) assesses the structure, regulation and performance
of the banking sector. Chapter (4) focuses on the Egyptian securities market, exploring its
development since its establishment in 1883. Further it analyses the performance of the
market using the main published indicators and highlights the impediments to its progress.
Chapter (5) is concerned with the growing role of Islamic finance in both the formal and
informal sectors in Egypt. After constructing a model to illustrate the distinctive
characteristics of Islamic banking, the chapter investigates the role of Islamic banks and
Islamic branches of conventional banks. The chapter also provides an analysis of the
Informal Islamic Investment Companies which flourished in Egypt during the 1980s.
Chapter (6) analyses the causes, measures and impact of financial repression in Egypt over
the period 1960-90. The findings of this chapter indicate that financing the budget deficit
was the main reason for repressing the financial sector. The chapter discusses the impact
of the different repressive methods used including inflation tax, interest rate ceilings, high
reserve requirements, directed credit schemes, regulation on the portfolio composition of
banks, and government ownership of financial intermediaries. The government revenues
from particular repressive measures such as inflation tax, seigniorage and interest rate
ceilings were estimated for the whole study period and were substantial by most
international standards. There follows a discussion of the main consequences of financial
repression including capital flight, money substitution, the excessive use of inflation
hedges and the thriving of informal financial transactions.
Chapter (7) presents an econometric analysis of the impact of the real interest rate on
saving, investment and economic growth in Egypt. The results of this analysis indicate that
the real interest rate had a positive impact on financial saving, possibly through a portfolio
shift. However its impact on total saving, investment and economic growth was
insignificant.
Chapters (8) and (9) are concerned with the issue of the coexistence of formal and
informal financial sectors in rural Egypt. The analysis is based on a survey, of 200
households undertaken by the author in four Egyptian villages in the Nile delta. The
methodology adopted and the description of the surveyed region are reported in chapter
(8). The findings provided in chapter (9) suggest that informal financial transactions in our
sample can be classified as intermittent. There was no evidence of the existence of
professional money lenders. Loans, with very few exceptions, were interest free. Most
loans were undertaken without contract or collateral. However default cases were low
thanks to societal governance. Moreover the chapter analyses the characteristics of RoSCA
in Egypt and its role in financial intermediation. The determinants of formal and informal
borrowing are estimated using Tobit analysis. The chapter concludes with a discussion of
the implications of financial liberalisation on household credit decisions.
This thesis highlights the importance of a liberalised financial system for economic
development in Egypt. However it argues that financial liberalisation, on its own, is not
a sufficient remedy for the problems encountered in the financial sector. Macroeconomic
stability and prudential regulation are considered to be essential prerequisites for
liberalisation. In addition the thesis strongly emphasises the need for the restructuring of
the financial system and the ensuring of its compatibility with the cultural environment to
enable the full realisation of the benefits of financial liberalisation.

Item Type:	Thesis (PhD)
Subjects:	H Social Sciences > HC Economic History and Conditions H Social Sciences > HG Finance
Library of Congress Subject Headings (LCSH):	Egypt -- Economic conditions -- 1952-, Finance -- Egypt -- History -- 20th century, Economic development -- Egypt -- History -- 20th century
Official Date:	February 1995
Dates:	Date Event February 1995 Submitted
Institution:	University of Warwick
Theses Department:	Department of Economics
Thesis Type:	PhD
Publication Status:	Unpublished
Supervisor(s)/Advisor:	Roe, Alan, 1942-
Sponsors:	Jāmiʻat al-Qāhirah. Kullĭyat al-Iqtiṣād wa-al-ʻUlūm al-Siyāsĭyah [Cairo University. Faculty of Economics & Political Science] ; University of Warwick. Dept. of Economics
Extent:	x, 407 leaves
Language:	eng

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