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

Abstract

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)