Banking and Finance

William Mako, Diego Sourroulle , The World Bank , 2010

Privately-managed funds that invest in a wide variety of asset classes are beginning to develop in MENA countries.  In terms of assets under management/GDP, however, investment funds in MENA countries are still small relative to those in countries with similar economic and demographic characteristics.  Well-run investment funds can offer individual investors (especially small ones) an efficient means of diversification.  They may contribute to market liquidity, price discovery, and better corporate governance. MENA governments can do more to promote investment fund development – by raising investor protections to IOSCO standards; allowing funds to invest in additional asset classes (e.g., real estate securities); development local bond markets; selling down residual government shareholdings in state- owned enterprises; further liberalizing capital flows as well as investment – both portfolio and directly in fund management operations – by foreign fund managers; selectively encouraging development of non- bank securities firms; and encouraging acquisition of smaller non-competitive funds and fund managers by larger peers.

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