Integration Between Arabic Financial Markets Case study of Amman Stock Exchange, Dubai, Abu-Dhabi and Bahrain Stock Markets

Abstract

The study examines financial integration between the share prices of the Amman Bourse, Dubai Financial Market, Abu Dhabi Stock Market and Bahrain Stock Exchange based on the monthly data of the General Stock Exchange Index and for the period between (2010-2016), using the short term causality of L. Granger and the long-term financial integration test used by Johansson. To this extent the stock prices’ indexes of the financial markets, the sample of the study, were examined using the Pearson correlation coefficient. The study’s hypotheses were based on a set of research questions to achieve the concerned objectives. The results showed there is financial integration between all these stock markets on the long-term and there was no causal relationship in the short-term with the exception of one between the Amman Bourse and the Abu Dhabi Stock Exchange. The study concluded there is a positive correlation between the share price indices of the study’s sample (0.83 - 0.14) and this means that there are no appropriate opportunities for the investor. The study therefore recommends the development of the relationship between the Arab financial markets to support financial integration and to pay greater attention to the laws and legislation to serve the financial integration.