The main objective of this paper is to assess the effect of the Bilateral Investment Treaties (BITs) on the correlation between international stock markets on a sectorial level. The paper attempts to identify the most affected sectors, besides highlighting the highly impacted countries by BITs signing, to compare the intensity of the effect based on the nature of the business operation. Analyzing the synchronization between international stock markets has been a crucial topic in the literature due to its criticality in grasping the benefits of international portfolio diversification. The extensive historical literature demonstrated and reviewed the co-movements between multiple global equity markets on a market index level. Nevertheless, this paper will add to this literature by assessing the impact of the BITs on the international stock market integration, which to our knowledge, has not been previously examined, especially on a sectorial level. In addition, the paper will add to the literature by expanding the research scale to include eight developed and sixteen developing countries over a time horizon extended from 1992 to 2022, which is considerably a wide span with respect to the previous literature. The quantitative method utilized in the paper adopted other macroeconomic indicators in order to better assess the degree of the effect of the BITs on the stock market correlation. The study findings can be summarized as follows: signing BITs results in a higher correlation between the concerned pair-wise countries. The strength of the correlation between the pair-wise countries seemingly differs depending on the industry and the time period. This study can be of a great importance for policymakers to mitigate the negative risk associated with the integration between the global stock markets during stability and volatility periods; and also, for the investors considering the rewards of international portfolio diversification that are lessened due to the integration between the international equity markets.


School of Business


Management Department

Degree Name

MS in Finance

Graduation Date

Spring 6-15-2023

Submission Date


First Advisor

Mina Ayad

Committee Member 1

Wael Abdallah

Committee Member 2

Rim Cherif


46 p.

Document Type

Master's Thesis

Institutional Review Board (IRB) Approval

Not necessary for this item

Available for download on Monday, May 19, 2025

Included in

Business Commons