Cryptocurrency and Stock Market: Complements or Substitutes?

  • Mina Sami The American University in Cairo
  • Wael Abdallah The American University in Cairo


The main goal of this study is to examine whether the cryptocurrency market impacts the stock market returns in the Gulf countries. Understanding this impact is quite interesting to clarify whether the cryptocurrency market and the stock market are substitutes or complements for investors. The author compiles the data on the stock market of the Gulf countries with the cryptocurrency data on a daily basis over the period 2014-2019. Generalized Method of Moments with Instrumental Variable (IV - GMM) approach has been implemented as the main strategy to fulfill the objective of the paper. The results of this paper show that the Stock market and the cryptocurrency market are substitutes for investors in Gulf countries. In fact, each 10 percent increase in the cryptocurrency returns is associated with a decline in the stock market returns by 0.17 percent. The cryptocurrency market hampers the stock market indices in the Gulf countries. Having agreed upon in the literature that the stock market is affected by fundamental factors, market sentiment, technical factors, and anomalies, this study offers robust evidence that the cryptocurrency should be introduced as one of the main determinants of stock market prices and returns.


Download data is not yet available.

Author Biography

Wael Abdallah, The American University in Cairo

Wael Abdallah is an assistant professor of finance. He earned PhD from University of Salford, UK. His areas of teaching (undergraduate and postgraduate levels) and research are mainly corporate finance, investment analysis, international finance, bank financial strength rating, credit risk management in financial institutions and derivatives.  In line with these, Abdallah is very active in delivering training modules and technical consultation services for corporate senior managers in many local and multinational firms and banks. 

Abdallah is a prolific writer and a regular participant in international conferences, seminars and workshops. He is an expert in applications of non-parametric modeling techniques; e.g., Neural Networks, CHAID and CART.

How to Cite
Sami, M., & Abdallah, W. (2020). Cryptocurrency and Stock Market: Complements or Substitutes?. Applied Finance Letters, 9, 25-35.
Articles submitted to regular issue