Paper Title
The Impact of Financial Development on Domestic Savings

Abstract
Using Arellano-Bover/Blundell-Bond Dynamic Panel System GMM for 23 EMs and 21 MENA countries over the period 1960-2014, this study analyzes how the relationship between financial development, more specifically access to finance and depth of finance, on domestic savings (as a percent of GDP). The study adds a dummy variable for the MENA countries along with an interaction term of financial indicators to specifically analyze the extent to which financial development affects domestic savings in the MENA region. The results of the study suggest that access to finance helps to increase domestic savings (as a percent of GDP) where a one unit increase in the access variable, estimated by the principal component analysis of two selected access variables, leads to an increase of about 0.013% in domestic savings. Also, using a financial depth variable, estimated using the principal component analysis of four selected financial depth variables, the results suggest that a one unit increase in depth variable leads to an increase in domestic savings by about 0.023%. JEL Classification Numbers: O16; O43; N20 Keywords- Financial Access; Financial Depth; System GMM; Domestic Savings; MENA