TY - JOUR AU - Sami, Mina AU - Abdallah, Wael PY - 2020/04/21 Y2 - 2024/03/29 TI - Cryptocurrency and Stock Market: Complements or Substitutes? JF - Applied Finance Letters JA - AFL VL - 9 IS - SE - Articles submitted to regular issue DO - 10.24135/afl.v9i0.214 UR - https://ojs.aut.ac.nz/applied-finance-letters/article/view/214 SP - 25-35 AB - 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 thecryptocurrency 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, andanomalies, this study offers robust evidence that the cryptocurrency should be introduced as one of the main determinants of stock market prices and returns. ER -