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The Iraqi Stock Market: Development and Determinants

  • Juergen Kaehler , Christoph S. Weber EMAIL logo and Haider Salahal-Din Aref
Published/Copyright: August 5, 2014

Abstract

The Iraqi stock market is a young and nascent market that began its operation in June 2004. This paper explains the development of the Iraq stock exchange (ISX). It is shown that some progress was achieved in its development but the market is still very small with less than 100 companies listed. Moreover, the determinants of the Iraqi stock market index are described. It is found that the ISX index is mainly driven by exchange rates, interest rates, the overall security situation as measured by an index for civilian deaths from violence, electricity as a proxy for economic activity, and the price index. Finally, this paper shows that the market still lacks efficiency. While the lack of efficiency is no surprise shortly after the opening of a market, it is noteworthy that the market is still inefficient after the introduction of electronic trading and an increase in liquidity.

JEL: G15; E44; O16

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  1. 1

    Recently, the ISX added the telecommunication sector as the eighth sector.

  2. 2

    All values refer to 2011. Data were taken from the World Bank webpage.


Note

The authors wish to thank Şefik Alp Bahadir, Max Estefan, and the participants of the research seminar of the Centre for Iraq Studies for very useful comments and suggestions.


Published Online: 2014-8-5
Published in Print: 2014-8-1

©2014 by De Gruyter

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