Financial Market Integration: Empirical Evidence from the Economic Cooperation of India and Pakistan

Journal of Economics and Sustainable Development, Vol. 5, No. 3, 2014

11 Pages Posted: 7 Nov 2014

See all articles by Sumra Latif Mughal

Sumra Latif Mughal

Shaheed Zulfikar Ali Bhutto Institute of Science and Technology (SZABIST), Students; Bahria University, Students

Ahsan Rizvi

Bahria University; SZABIST

Muhammad Mubeen

IQRA University

Naveed Iqbal

Shaheed Zulfikar Ali Bhutto Institute of Science and Technology (SZABIST) - Karachi Campus; SUPARCO

Date Written: March 2, 2014

Abstract

The aim of this study was to explore the integration between financial markets of India and Pakistan with the help of economic cooperation among them. Monthly data from the period of January 2002 to December 2012, was applied for this stud, the data of Monthly stock price index and Trade was used. The results highlighted that there is cointegration between the two stock markets in short run, and as we have used 11 years data it is not appropriate to conclude the long run relationship on this basis, although the Johansen Cointegration test proves the presence of two cointegrating vectors. Therefore we may conclude that there is direct cause and effect relationship between stock markets of India and Pakistan with respect to trade and if the hindrances in trade are removed the financial markets will perform much better than now. Trade between India and Pakistan is of great importance for the development of both the nations as well as the regional development. There are ample opportunities available for the investors as well, they can reduce risk and earn higher returns by investing in each other’s markets.

Keywords: Financial Markets, Financial Markets Integration, Economic Cooperation, Cooperation versus Integration

Suggested Citation

Mughal, Sumra Latif and Rizvi, Ahsan and Mubeen, Muhammad and Iqbal, Naveed, Financial Market Integration: Empirical Evidence from the Economic Cooperation of India and Pakistan (March 2, 2014). Journal of Economics and Sustainable Development, Vol. 5, No. 3, 2014, Available at SSRN: https://ssrn.com/abstract=2403406

Sumra Latif Mughal

Shaheed Zulfikar Ali Bhutto Institute of Science and Technology (SZABIST), Students ( email )

Karachi
Pakistan
923333212120 (Phone)

Bahria University, Students ( email )

Pakistan

Ahsan Rizvi

Bahria University ( email )

Pakistan

SZABIST

szabist 100 90108 reserach villa
Karachi
Pakistan

Muhammad Mubeen (Contact Author)

IQRA University ( email )

Defence View
Shaheed-e-Millat Road (Ext.)
Karachi, Sindh 75500
Pakistan

Naveed Iqbal

Shaheed Zulfikar Ali Bhutto Institute of Science and Technology (SZABIST) - Karachi Campus

szabist 100 90108 reserach villa
Karachi
Pakistan

SUPARCO

SUPARCO Road
P. O. Box No. 8402
Karachi-75270
Pakistan

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