Cross-Border Assets Holdings, Equity Securities, and Debt Securities between Gulf Cooperation Council (GCC) and Organization for Economic Co-Operation and Development (OECD)

Abstract

This paper investigates the trends of asset holdings across borders to GCC financial markets through panel data and compares the findings with those acquired for the OECD countries. A gravity panel data model was set on bilateral gross cross-border investment flows between GCC countries and host OECD countries between 2002 and 2019. Three dependent variables were used; aggregate equity securities and debt securities, equity securities, and debt securities. Data were obtained from the International Monetary Fund's (IMF) coordinated Portfolio Investment Survey (CIPS) and converted into real terms using the GDP deflator. The World Bank (2014) World Development Indicators Database (WDI) provided data for GDP deflators. The results indicate that the source economies' bilateral trade, GDP per capita, and population are always positive and significant determinants of cross-border linkages. Geographical proximity (Distance) is found to exert a significant positive influence on assets so that investors may seek to diversify their portfolios and prefer to invest outside their region.