Regional Financial Integration in the GCC

34 Pages Posted: 12 Apr 2010

See all articles by Raphael A. Espinoza

Raphael A. Espinoza

International Monetary Fund (IMF)

A. Prasad

International Monetary Fund (IMF)

Oral H. Williams

International Monetary Fund (IMF)

Date Written: April 2010

Abstract

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.

Keywords: 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

Suggested Citation

Espinoza, Raphael A. and Prasad, Ananthakrishnan and Williams, Oral H., Regional Financial Integration in the GCC (April 2010). IMF Working Papers, Vol. , pp. 1-33, 2010. Available at SSRN: https://ssrn.com/abstract=1586679

Raphael A. Espinoza (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

HOME PAGE: http://oxford.academia.edu/RaphaelEspinoza

Ananthakrishnan Prasad

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Oral H. Williams

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

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