The Effect of Development of Financial Markets and Globalization on Inflation in Selected Middle East Countries

The purpose of this research was to study the effect of development of financial markets and globalization on inflation in selected Middle East countries (Iran, Kuwait, Saudi Arabia, UAE, Qatar, and Turkey) during 2005 and 2019. The type of this research is applied, and the research method is inferential and analytical. The theoretical foundations are extracted based on the library method from related articles, and then, the model is estimated using the Panel Data techniques with the help of Eviews software. The integrative data analysis method was used to estimate the model. The results showed that with a 1% increase in the degree of economic openness, the variable of the Price Index logarithm decreases by 0.19%. Thus, globalization has a negative impact on inflation; with a 1% increase in the credit volume, the variable of the Price Index logarithm increases by 0.06%. With a 1% increase in the volume of exchanges in the capital market, the variable of the Price Index logarithm increases by 0.023%; therefore, the development of financial markets does not have a negative impact on inflation. The results of the research showed that development of financial markets increase the inflation and globalization decreases the inflation.

Keywords:

development of financial markets , globalization , inflation , selected Middle East countries