Financial integration of the GCC stock markets -

Abstract

The Gulf Cooperation Council countries have recorded the highest GDP growth rates among the Arab region through sound policies and a profound focus on heavy investment in different sectors. All of that could be easily seen today through their sound economic, social, and demographic indices. More importantly, being the leaders in the Arab region, the GCC financial markets have undoubtedly established very high standards and have promoted their competitiveness even on a worldwide scale despite their relatively smaller sizes. They have declared the goal of establishing a more integrated financial system through openness, economic diversification, expansion, modification of laws and regulations to attract more foreign investment, the proposal of a common currency and a market-merger that could possibly unite their strengths. Hence, the question of the integration of the six GCC stock markets is a key finding that should be relied on in analyzing the future of these countries’ economies. This project focuses on examining whether and to what extent the markets are interrelated and interdependent by investigating the short-run and long-run relationships among the seven markets. My project tackles the integration of GCC stock markets via a time-series analysis. It will be divided into five main chapters as follows: Chapter (1) will be an introduction that covers a brief overview about the topic and the current situation of GCC financial markets and where they stand, and what questions this project aims to answer. Chapter (II) presents a literature review that shows what past researches have discussed, what methodology they’ve used, and what conclusions they’ve made about the integration of GCC or other stock markets. Chapter (III) overviews the seven GCC stock markets: the detailed characteristics and the focal developments during that phase along with an overview on stock market mergers. Chapter (IV) presents the detailed empirical approach to study the financial integration of the GCC through time-se