Title: Improved friendly relations, bilateral trade and stock markets: a causal relationship study of India and Israel

Authors: Vandana; Shveta Singh

Addresses: Haryana School of Business, Guru Jambheshwar University of Science and Technology, Hisar, 125001, India ' Haryana School of Business, Guru Jambheshwar University of Science and Technology, Hisar, 125001, India

Abstract: The study aims to analyse India and Israel's bilateral trade ties and the dynamic relationship between both countries' equity markets following bilateral trade. The trade intensity index is utilised to examine the bilateral trade between the two countries, while the daily stock prices of NSE NIFTY of India and TA-125 of Israel for January 2000-December 2020 are used to analyse the association amid the bourse. The results of the two-step Engle-Granger co-integration test and the Granger causality test indicate that bilateral trade is an exogenous variable and the stock prices of these countries are co-integrated in the long run. Further, India is the net exporter, contributing approximately 5% to Israel's overall trade. Both countries have demonstrated effective financial and trade interdependency amid a slow development in their bilateral political depth.

Keywords: Indo-Israel; stock market; India; Israel; bilateral trade; Engle-Granger cointegration; Granger causality; diplomatic relation; political relation; NSE; TA-125.

DOI: 10.1504/IJICBM.2023.134240

International Journal of Indian Culture and Business Management, 2023 Vol.30 No.2, pp.273 - 290

Received: 14 Sep 2021
Accepted: 21 Jun 2022
Published online: 14 Oct 2023 *

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