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Regional Financial Integration in the GCC

Author/Editor: Espinoza, Raphael A. | Prasad, Ananthakrishnan | Williams, Oral
Authorized for Distribution: April 1, 2010
Electronic Access: Free Full Text (PDF file size is 1,437KB)
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.

Summary: We investigate the extent of regional financial integration in the member countries of the Gulf Cooperation Council. The limited volume data available suggests that regional integration is non-negligible. Bahrain and Kuwait investments especially are oriented towards the region. The development of stock markets in the region will also improve the extent of financial integration. Interest rate data shows that convergence exists and that interest rate differentials are relatively short-lived-especially compared to the ECCU, another emerging market region sharing a common currency. Equities data using cross-listed stocks confirms that stock markets are fairly integrated compared to other emerging market regions, although financial integration is hampered by market illiquidity.
 
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Series: Working Paper No. 10/90
Subject(s): Asset prices | Banking sector | Capital flows | Cooperation Council for the Arab States of the Gulf | Cross country analysis | Currency pegs | Economic integration | Interest rates | Monetary policy | Monetary unions | Regional shocks | Stock markets
Author's keyword(s): Interest rate convergence | sigma-convergence | beta-convergence | arbitrage opportunity | cross-listing | regional capital flows
 
English  
    Published:   April 1, 2010        
            Format:   Paper
    Stock No:   WPIEA2010090   Pages:   33
    Price:   US$18.00
       
     
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