Informational efficiency in the GCC stock markets: Practical issues and possible solutions

Cherabi, Imededdine; Benbouziane, Mohammed

les cahiers du mecas
Volume 10, Numéro 1, Pages 159-170
2014-12-31

Informational Efficiency In The Gcc Stock Markets: Practical Issues And Possible Solutions

Authors : Cherabi Imededdine . Benbouziane Mohammed .

Abstract

It is the objective of this paper to (i) assess the informational efficiency of the GCCstock markets; (ii) identify the potential barriers to higher market efficiency and (iii) discuss the best practices in order to improve it. Some of the studies concluded that GCC stock markets are already weak-form efficient. Most of the studies concluded that a lot remains to be done in order to reach weak-form efficiency. Stock markets in the GCC region are generally characterized by an enormous lack of efficiency, especially when compared withmarkets in developed countries.The (i) lack of equity culture;(ii) thin trading;(iii) lack of reliable information;(iv) non-harmonized accounting standards and(v) excessive government ownership of listed companies are some of the reasons behind such findings. Higher market efficiency can be achieved by: (i) strengthening financial regulation; (ii) liberalization of the stock market; (iii) promoting financial integration and(iv) imposing thoughtful transaction costs.