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The Integration of Financial Markets in GCC Countries

Author

Listed:
  • Shabbir Ahmad

    (Assistant Professor at the College of Business, Effat University, Jeddah, Saudi Arabia)

Abstract

The real interest parity (RIP) condition states that the interest rate differential between two economies is equivalent to the differential between the forward exchange rate and the spot exchange rate. This study examines the integration of financial markets in the GCC countries by verifying the validity of RIP in their economies. Using univariate and different panel unit root tests, we find evidence supporting the RIP theory, which indicates that the financial markets in these countries are well integrated and that the adoption of a common currency would be relatively easy.

Suggested Citation

  • Shabbir Ahmad, 2011. "The Integration of Financial Markets in GCC Countries," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 50(3), pages 209-218.
    • Handle: RePEc:pid:journl:v:50:y:2011:i:3:p:209-218
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    File URL: http://www.pide.org.pk/pdf/PDR/2011/Volume3/209-218.pdf
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    Citations

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    Cited by:

    1. Balcilar, Mehmet & Elsayed, Ahmed H. & Hammoudeh, Shawkat, 2023. "Financial connectedness and risk transmission among MENA countries: Evidence from connectedness network and clustering analysis1," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 82(C).
    2. Shabbir Ahmad, 2019. "The Impact of Oil Price Uncertainty on Stock Returns in Gulf Countries," International Journal of Energy Economics and Policy, Econjournals, vol. 9(6), pages 447-452.

    More about this item

    Keywords

    Real Interest Parity; GCC Countries; Panel Unit Root Tests; Monetary Union;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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