The Integration of Financial Markets in GCC Countries

Shabbir Ahmad
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Shabbir Ahmad: Assistant Professor at the College of Business, Effat University, Jeddah, Saudi Arabia

The Pakistan Development Review, 2011, vol. 50, issue 3, 209-218

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.

Keywords: Real Interest Parity; GCC Countries; Panel Unit Root Tests; Monetary Union (search for similar items in EconPapers)
JEL-codes: C23 F21 F36 (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:pid:journl:v:50:y:2011:i:3:p:209-218

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