The stock market of Saudi Arabia was opened up recently to Foreign Institutional Investors. (FIIs). This research tests the relationship between FIIs investment and Saudi stock market over the period 2015-2019 using weekly data. The auto-regressive distributed lag bounds test is applied to check for the presence of integration between FIIs investment and stock market. ARDL (2,1) model shows a positive long-run and short-run relationship between FIIs investment and Saudi stock market. The Granger causality test confirms a bidirectional relationship between FIIs investment and stock market. The positive power FIIs have over the Saudi stock market should facilitate the stabilization of the market and the reduction of its volatility, which is the goal market regulator\'s attempt to achieve.

Username
Password