The financial market of Saudi Arabia is of key importance because firstly Saudi Arabia for a long time has remained more so a conservative country with regards to its opening of financial and other sectors to foreigners. The country relies heavily on the oil revenue. However, with time the government has realized the potential of growth through the development of other sectors and is taking steps to ensure sustainable development through other channels. One of the key developments has been the development of Saudi Stock exchange which is contented to be ‘the largest in the [Middle East] region, accounting for 56% of the six Gulf’s Arab markets and forming up one third of Arab countries ‘total stock markets’” (Hammoudeh and Gudhea 2007).
With the Gulf Countries Cooperation (GCC) expected to follow the agreement in establishing a Gulf Monetary Union by this year, the role of the biggest financial market and its impact on the other Arab states becomes an important issue. According to Assaf (2003) ‘the development of financial markets in the GCC region has opened a new era of mobility of financial resources, whereby flows of private capital has assumed an increasing role as a source of finance for these markets’. The liberalization of the financial market is a challenge for the GCC, especially, for Saudi Arabia where there are considerable obstacles for the non-Saudis in accessing the financial market.
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