Abstract

This study investigates how economic reforms in capital markets in the Gulf Cooperation Council (GCC) between 2015 and 2024 reshape return dynamics and investor risk profiles. We employed a mixed-methods design that integrated a constructed regional capitalization-weighted index (RGCC) and dynamic econometric modeling (ARDL) with a thematic analysis of specialized documentary sources. The quantitative results demonstrate that structural reforms do not produce statistically significant abnormal returns, and oil prices remain the primary valuation driver. However, we find a substantial change in risk: the reforms spur a structural decrease in idiosyncratic volatility (p = 0.056), suggesting a market maturation process. Qualitative evidence corroborates this trend, revealing a transition from initial reactive and panic-driven responses to greater institutional stability and rationality in the post-reform period. These findings suggest that regulatory improvements in resource-dependent economies can mitigate ambiguity aversion and strengthen financial stability, even in oil-dominated contexts without inducing asset inflation.

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