Causality between FDI and Financial Market Development: Evidence from Emerging Markets

Soumaré, Issouf; Tchana, Fulbert Tchana

doi:10.1093/wber/lhv015

Cited by 77 publications

(40 citation statements)

References 12 publications

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“…(Soumaré & Tchana, 2015) Public capital markets, in particular stock markets, are widely considered as an important part of the financial intermediation processes as a form of non-bank lending for companies. Moreover, nowadays, the stress is placed also on SMEs' access to capital funding through stock exchanges.…”

Section: The Importance Of Stock Markets and Assessment Of Their Behamentioning

confidence: 99%

Stock Market Development Beyond the Gfc: The Case of V4 Countries

Vychytilova¹

2018

JOC

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The stock exchanges are widely considered to be pivotal institutions providing the capital for companies and helping them to gain competitive advantage through economies of scale. This paper examines and sheds additional insight into the stock market behaviour of countries of Visegrad Group, namely the Czech Republic, Slovak Republic, Poland and Hungary, beyond the global financial crisis. The study uses data about official stock market indices of the four official stock exchanges in the Visegrad region, between the years 2010-2016. It applies the correlation analysis in attempt to find out whether the indices, namely the BUX Index, PX Index, SAX Index and WIG 20 Index, have similarities in their behaviour, beyond the crisis. The results indicate the V4 stock markets of geographically connected economics exhibit significant similarities in their behaviour, in the post-crisis period. The paper, inter alia, stresses the importance of the stock markets and provides a coherent overview on official V4 stock markets and their official stock market indices.

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Section: The Importance Of Stock Markets and Assessment Of Their Behamentioning

confidence: 99%

Stock Market Development Beyond the Gfc: The Case of V4 Countries

Vychytilova¹

2018

JOC

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“…Low inflation, stable interest rates, judicious fiscal and prudent monetary policy along with steady exchange rate regimes signals macroeconomic soundness of the host economy and encourage the investors to invest with confidence (Dell'Erba & Reinhardt, 2015;Shah, 2016). Similarly, the presence of a relatively efficient credit and financial services structure (Soumaré & Tchana, 2015) and the functionality and availability of an advanced commercial set up shall assist overseas investors particularly in the services sector (Becker, Chen, & Greenberg, 2013).…”

Section: Conventional Fdi Location Determinantsmentioning

confidence: 99%

Inward FDI in East Asian & Pacific Developing Countries due to WTO Led Liberalisation

Shah¹

2017

BER

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This research paper evaluates the relative significance of World Trade Organisation (WTO) accession in general and that of WTO led liberalisation in particular in increasing an East Asian and Pacific (EAP) developing country's desirability for foreign direct investors. Other FDI influencing factors such as economic development, macroeconomic stability, trade agreements, host market size, financial development and existence of intellectual property rights standards are also taken into consideration. Through the utilisation of annual aggregate observations for twenty eight years i-e 1988-2015, for a panel of eleven EAP developing countries, it was established that trade and investment liberalization, as well as size of local market, its extent of development, low inflation, steady depreciation of host currency and stringent IPR makes these developing nation states from East Asia and Pacific region more attractive for multinational investment. In contrast, trade agreements and financial development, though very important conventional FDI location pull factors, were insignificant in all the regression models. Moreover, it was established through the fixed and random effect panel estimation techniques that these findings are robust to the use of different empirical panel valuation methods.

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“…Another important factor of the FDIs' inflows is the level of financial market development both in investing and receiving countries (Donaubauer et al, (2016). Being an intermediary determinant of the FDI's influence on economic growth (Onwuka and Chaiechi (2013); Sghaier and Abida (2013); Nobakht and Madani (2014); Alfaro (2016) or having a direct effect on attracting foreign capital (Soumare and Tchana (2015), developed financial markets help countries benefit from FDI spillovers and enhance economic growth (Javorcik and Spatareanu (2008); Alfaro (2016)), while helping foreign companies finance investments abroad (Alfaro (2016)). Moreover, Soumare and Tchana (2015) demonstrate that there is a bilateral relationship between foreign investments and the degree of development of financial markets.…”

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%

“…Being an intermediary determinant of the FDI's influence on economic growth (Onwuka and Chaiechi (2013); Sghaier and Abida (2013); Nobakht and Madani (2014); Alfaro (2016) or having a direct effect on attracting foreign capital (Soumare and Tchana (2015), developed financial markets help countries benefit from FDI spillovers and enhance economic growth (Javorcik and Spatareanu (2008); Alfaro (2016)), while helping foreign companies finance investments abroad (Alfaro (2016)). Moreover, Soumare and Tchana (2015) demonstrate that there is a bilateral relationship between foreign investments and the degree of development of financial markets. As such, the financial markets development is assumed to explain the tendencies of inward FDI's, while attractin foreign investors who search for a regulated and transparent framework for their long-term investments.…”

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%

Examining the Influence of Some Macroeconomic Factors on Foreign Direct Investments

Țaran

Mironiuc

Huian

2016

Review of Economic and Business Studies

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The aim of this paper is to study the determinants of inward foreign direct investments (FDI) at a multi-regional and European level, while focusing on a series of macroeconomic factors, in the FDI receiving countries. Multiple regression analysis and ANOVA analysis of variance are applied. Findings show that the degree of economic freedom is a significant factor of multi-regional inward FDI during the period 2012-2015, but this effect is caused only fiscal freedom, government spending, monetary, trade, and financial freedom. For the more economically and politically stable European countries, the level of economic freedom does not influence their inward FDI. At the same time, market size and level of economic development of the host countries have a positive influence on FDI inflows, while financial markets development, workforce availability and adoption of the International Financial Reporting Standards (IFRS) are not significant determinants.

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Causality between FDI and Financial Market Development: Evidence from Emerging Markets

Cited by 77 publications

References 12 publications

Stock Market Development Beyond the Gfc: The Case of V4 Countries

Stock Market Development Beyond the Gfc: The Case of V4 Countries

Inward FDI in East Asian & Pacific Developing Countries due to WTO Led Liberalisation

Examining the Influence of Some Macroeconomic Factors on Foreign Direct Investments

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