This paper explores the political and economic determinants of remittance transfers by foreign workers in hosting countries with an application to the case of the Gulf Cooperation Council (GCC) countries. Our empirical model is estimated with the fixed-effects technique applied on annual data covering the period 1996-2019. The main result confirms that both the economic and political stability do matter to remittance transfers. First, our findings suggest that higher per capita growth across the GCC region tends to discourage remittance transfers. Second, we find a statistically significant and positive relationship between oil prices and remittance transfers. Third, our findings show that political stability across the host countries can shape remittances. Put it simply, higher political stability tends to induce lower remittance outflows. While conventional findings on importance of economic factors for remittances are confirmed, this research signifies that any change in political stability across the GCC might affect decisions made by foreign workers. This finding has general implications for similar regions throughout the world suggesting that political stability has a strong effect on the flow of remittances.

This paper investigates the validity of the expectations hypothesis for the term structure of interest rates in the context of the deposit interest rates in Kuwait. The data set covers average inter local bank interest rates on deposits of Kuwaiti Dinar (KD) with maturity of one, three and six months from the period June 1994 to August 2008. We utilize Johansen procedures to examine the relationship between spot and forward rates. Our findings show that the spot and forward rates are cointegrated for all cases, the one month interest rates, the three month interest rates as well as the six month interest rates. The explanation of this relationship indicates that the expectations hypothesis of the term structure of interest rates is accepted for the case of Kuwait.

In this study, we examine the short-term effects of the resignations of high-ranking officials from the Reserve Bank of India (RBI) on financial sector returns. We apply a commonly used event-study method to analyze financial sector stocks during the period from February 16, 2018, to July 22, 2019. The findings reveal that the financial sector was sensitive to the resignations of RBI Governor Urjit Patel and Deputy Governor Viral Acharya, both strong supporters of the RBI's independence. Patel’s resignation caused a significant negative impact on cumulative abnormal returns, while Acharya’s resignation led to a significant positive impact on these returns. Our results suggest that central bank independence (CBI) may have varied short-term effects on financial sector performance. It is, therefore, important for both politicians and investors to understand the implications of our findings in order to fully grasp the political and economic consequences of central bank independence and the credibility of monetary policy on financial sector outcomes. For future research, we suggest exploring the effects of these resignations on other financial indicators, such as bond yields, exchange rates, and interest rates, using alternative methods.

In this paper, we examine the effect of President Nicolás Maduro’s capture on the returns of the 46 US energy firms using event-study methodology. We utilize both mean adjusted returns and a market model to compute cumulative average abnormal returns (CAARs) for seven event windows using a 250-day estimation period complemented by 200- and 100-day estimation periods. On the event day, at the aggregate level, we find that the effect is insignificant on the average abnormal returns. However, on CAARs at the [-3, +3] event window, results show that the event has a significant positive effect. This suggests that the market has reevaluated the consequences of regime change and a net positive effect has developed slowly. Results are robust at 200- and 100-day estimation windows. In examining the effect on the subsectors, we find evidence of considerable heterogeneity across the energy firms. For example, at the [-3, +3] event window, results show that oil field services have achieved the highest significant CAAR of +11.59%, followed by refiners with +9.22% and integrated services with +5.24%, whereas exploration and production independents and midstream achieved insignificant CAARs of +0.90% and +0.32%, respectively. Also, by classifying the firms into two groups—those whose revenues are mainly driven by crude oil products (core sample of 38 firms) versus those whose revenues are mainly driven by gas products (broader sample of eight firms), we find that at the [-3, +3] event window, the core sample achieved a CAAR of +5.03%, whereas the broader sample achieved a CAAR of -4.09%, implying that the market response was exclusive to the crude oil effect. By dividing the firms into three categories—firms with direct Venezuela exposure, firms with indirect Venezuela exposure, and firms with no exposure—we find that at the [-3, +3] event window, firms with direct exposure achieved a CAAR of +4.51% at the 10% level of significance, followed by firms with indirect Venezuela exposure that achieved a CAAR of +12.30% at the 1% level of significance and firms with no exposure that achieved an insignificant CAAR of +1.33%. Our findings suggest that in the political uncertainty literature, a geopolitical intervention may have a positive effect on abnormal returns whenever there is a quick resolution of uncertainty. In addition, our results show that investors’ behavior followed a capital rotation pattern in the US energy sector.

Purpose: We examine empirically the determinants of the money demand in the GCC countries. In addition to conventional variables, we assess the impact of the COVID-19 pandemic on money demand.Study design/methodology/approach: We estimate a log-linear model in which we estimate a log-linear specification of real money demand on a number of independent variables, using several panel data techniques, namely pooled OLS, fixed-effects, random- effects, and Hausman tests.Sample and data: We use a sample of annual data for the six GCC countries over the 2010–2024 time period.Results: The estimates identify key determinants of money holdings in the GCC countries. Specifically, we found that GDP, the U.S. federal funds rate, exchange rate, and the COVID-19 dummy variable positively influence the demand for real money balances. In addition, we found that the interest rate and inflation rate exert a negative impact.Originality/value: The paper contributes to the literature by providing new evidence on the dynamics of money demand in the GCC region. We estimated a log-linear model in which we utilized a number of panel data analysis techniques, namely pooled OLS, FE, RE, and Hausman tests. The paper is the first to assess the impact of COVID-19 pandemic on money demand in the GCC countries.Research limitations/implications: The results have practical implications by providing a robust empirical estimation of the direction and magnitudes of the determinants of the holdings of money balances. One limitation is the lack of quarterly GDP data in the region.