The Theoretical Considerations of Financial Markets Integration: the Case of Arab Countries

The main goal behind this study is to analyze the concept of financial markets integration. The study concentrates on the Arab countries and presents the possibility of its application on these countries. This study was conducted to examine the financial markets integration from a theoretical point of view including the factors standing against the financial integration, efforts of Arab countries in addition to the risks and benefits related to this integration process. The results indicate that the financial integration of Arab countries is low and more efforts have to be spent for the real integration to be achieved. Financial markets integration is considered as an important tool to support the development of trade and capital movement both inside Arab countries and internationally. Keywords: Law of One Price (LOOP), Financial Markets Integration (FMI), Greater Arab Free Trade Area (GAFTA), International Monetary Fund (IMF

An Empirical Investigation on the Financial Integration between Arab Countries and the European Union Using Johansen Approach

The objective of this research is to examine the extent of integration between the European Union countries and the Arab countries financial markets. There are several methods have been used to examine the existence of integration. However, the Johansen approach to integration is considered a more reliable method than other conventional integration approaches and is applicable irrespective of the order of integration of the time series. Unlike most of the conventional integration procedures, which are valid for large sample size, Johansen approach is more robust and performs well for large sample sizes. The results of the test show that when Arab market index is a dependent variable, the null hypothesis of no integration cannot be accepted. This suggests the existence of a long-run relationship between European Union markets and Arab markets. While, when European Union is the dependent variable, the null hypothesis of no cointegration can be accepted. According to the results, both markets are moving together in the same direction when Arab markets are the dependent variable while not in case of the European Union is the dependent variable. Keywords: Financial Markets Integration, Johansen Approach, Law of One Price (LOOP), Capital Asset Pricing Model (CAPM), Market Capitalization, Arab Countries, European Union (EU)

Measuring the Performance of the Kuwaiti Banking Sector Before and After the Recent Financial Crisis

The objective of this research is to investigate the determinants of the performance of the Kuwaiti banking sector before and after the recent financial crisis over the period of 2006-2012. The data utilized is based on the yearly financial statements of the Kuwaiti banks that are listed on Kuwait Stock Exchange over the same period. There are several methods have been used to identify the determinants which impact the performance of the banking sector. In this research, a ratio analysis technique is considered efficient and more reliable method than other approaches. Other factors such as trend, government regulations and other economic factors are also included. The study found that the overall banking sector performance increased considerably in the first two years of the analysis. A significant change in trend is noticed at the onset of the global financial crisis in September 2008, reaching its peak before the global financial crisis. This resulted in decreasing the profitability, return on equity, assets and capital. Keywords: Banking Sector, Financial Performance, Financial ratios, Interest Spread Rate, Kuwait Stock Exchange (KSE), Growth Ratios, Financial Crisis