ABSTRACT. Three major events associated with significant levels of market uncertainty – the Iraq invasion, the global financial crisis, and the Arab Spring revolution – are studied in this paper with the aim of identifying if there are connections between oil prices and the performance of the Kuwait stock market during these events. The study is supported by the traditional Engle and Granger cointegration test, the Granger causality test and Frequency Domain Causality Analysis. The frequency domain causality analysis brings a dynamic dimension to the study, and facilitates the examination of potential relationships between oil prices and the Kuwait stock market over the period under study (1995 to 2016). Interestingly, the research findings did not offer significant evidence on the existence of a long run association between Brent oil prices and Kuwait’s major stock price index. Short-run dynamics were identified as follows: i) unidirectional causality was found between Brent and the Kuwait stock market, a result was not confirmed during the Arab Spring event; ii) the dynamic causality test revealed a unidirectional relationship from oil to the stock market only during the Iraq invasion. The findings indicate that market players should benefit from monitoring short-run dynamics in the context of the Kuwait Stock Exchange.
JEL codes: D53; D81; E44; N25; O16

Keywords: Kuwait; stock market; oil prices; market uncertainty; causality

How to cite: Abdulrazzaq, Yousef M., Lucía Morales, and Joseph Coughlan (2019). “Oil Sector Spillover Effects to the Kuwait Stock Market in the Context of Uncertainty,” Economics, Management, and Financial Markets 14(1): 21–37.

Received 20 June 2018 • Received in revised form 2 January 2019
Accepted 3 January 2019 • Available online 25 January 2019


Department of Economics and Finance,
Gulf University of Science and Technology, Kuwait
This email address is being protected from spambots. You need JavaScript enabled to view it.
School of Accounting and Finance,
Technological University Dublin, Dublin, Republic of Ireland
(corresponding author)
School of Business,
Maynooth University, Republic of Ireland

Home | About Us | Events | Our Team | Contributors | Peer Reviewers | Editing Services | Books | Contact | Online Access

© 2009 Addleton Academic Publishers. All Rights Reserved.

Joomla templates by Joomlashine