Interdependence of Banking and Stock Market Return in the Gulf Cooperation Council (Preliminary Analysis)

Abstract

This paper investigates an empirical analysis into the relationship between return of banking sector and stock market return in the Gulf Cooperation Council (GCC). A number of researches argue that financial sectors in the GCC countries are dominated by banking systems which means stock market as a component of financial system interrelated with banking market. The results indicate a positive relationship between banking industry in each GCC country and both GCC banking and stock market return in each GCC state, while negative relationship is existence with composite GCC stock market return. This paper uses quantitative methods based on regression analysis to examine the relation between stock market and banking industry in each GCC country for the period of Jan 2007-April 2011.