International Stock Markets Integration: A Case Study of Selected OIC Countries


  • Humera Iram International Islamic University, Islamabad, Pakistan
  • Muhammad Amin Department of Economics and Finance, International Islamic University, Islamabad, Pakistan


Stock markets, Integration, OIC countries, Portfolio diversification


This study examines the integration in eight selected emerging stock markets from the OIC countries namely Pakistan, Bangladesh, Egypt, Indonesia, Iran, Saudi Arabia, Turkey, and Malaysia for the period of March 1998 to March 2016. The study adopts a combination approach by considering the combination of two countries, then a combination of three countries, and so on up to the nth combination of the stock markets using the Autoregressive distributive lag approach. The results show that there is a systematic pattern of long-run equilibrium relationship among the stock markets of selected OIC countries. Malaysia, Indonesia, and Turkey are found to be leading stock markets in the selected group. The results of this study will provide a pattern of beneficial portfolio diversification to investors.