Determinants of foreign portfolio investment: the case of Jordan

Al-Smadi, Mohammad O.

doi:10.21511/imfi.15(1).2018.27

Cited by 21 publications

(14 citation statements)

References 17 publications

(16 reference statements)

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“…The finding is reinforced by the study of Rashid and Khalid (2017). Inflation was found to have a negative impact on FPI inflows, a conclusion similarly reached by Agrawal (1997), Haider et al (2017), Singhania and Saini (2018) as well as Al-Smadi (2018). Similar to the papers by De Santis and Luhrmann (2009) and Garg and Dua (2014), the real GDP growth emerged as being positively correlated with FPI inflows, as it is an indicator of sound macroeconomic policies.…”

Section: Discussion Of Findingssupporting

confidence: 64%

“…Institutional quality measures the legal, political, economic, and bureaucratic characteristics of host countries. The findings that there is a positive relationship between FPI and institutional quality are collaborated by Ekeocha et al (2012) and Al-Smadi (2018). Daude and Fratzscher (2008) affirmed the importance of strong regulatory institutions as a prerequisite for host nations to be able to attract FPI inflows.…”

Section: Discussion Of Findingsmentioning

confidence: 76%

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Foreign Portfolio Investments, Exchange Rates and Capital Openness: A Panel Data Approach

Patrícia¹

2020

IJEBA

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The aim of this paper is to examine the effect of real exchange rate and capital openness on foreign portfolio investments, using a panel of nine African countries, after the global financial crisis in the period 2009-2016. Design/Methodology/Approach: We adopted a panel data approach, and more specifically data was analysed using the Fixed Effects model. The economic data was sourced from the World Bank database of development indicators, while we used Chinn and Ito's database for capital openness. Findings: Building on from the international finance and portfolio behaviour theories, the results show that real exchange rates, capital openness and the rate of inflation have a negative relationship with FPI inflows. On the contrary, the lag of FPI, institutional quality, real economic growth rate and stock market development attract inward FPI, as portrayed in the positive relationship between the dependent and independent variables. Practical Implications: In accordance with these findings, we find that, host countries' governments that adopted fiscal and monetary policies can ensure macroeconomic stability, and a prudently managed exchange rate through incentivising exports and discouraging imports into the host country, to attract inward FPI flows. Originality/Value: The study confirms the theoretical and empirical underpinnings that there is a negative relationship between foreign portfolio investment, and real exchange rates and capital openness, respectively in most developing countries, and African economies are no different.

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Section: Discussion Of Findingssupporting

confidence: 64%

Section: Discussion Of Findingsmentioning

confidence: 76%

Foreign Portfolio Investments, Exchange Rates and Capital Openness: A Panel Data Approach

Patrícia¹

2020

IJEBA

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“…He defined FPI as a component of international capital flows which involved the transfer of financial assets such as cash, stock or bonds across international boundaries in search of profit. The FPI caters for funds needed for domestic companies which affect positively on employment and income and consequently intensify the economy's capacity to transfer its savings to the national productive activities (Al-Smadi, 2018). Propelled by these linkages between capital flows and economy, many studies have used macroeconomic factors as proxy or measurement to capture the asymmetric information in examining its effect on capital flows.…”

Section: Literature Reviewmentioning

confidence: 99%

The Influence of Asymmetric Information on Foreign Capital Inflows in Asean Plus Three Countries

Nor

Janor

Yaacob³

et al. 2021

International Journal of Management Studies

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This paper examines the influence of asymmetric information on foreign capital inflows in ASEAN PLUS THREE (ASEAN+3) countries. Linking capital flows to stock market setting, it substantiates other efforts concerning the debatable issues of the effect of asymmetric information on foreign direct investment (FDI) and foreign portfolio investment (FPI). The asymmetric information is captured through the stock market microstructure perspective on the width and depth dimensions using highly frequency cross sectional data from year 2000 to 2015. Roll and Amivest models are employed to quantify the width and depth aspects of the asymmetric information. Employing the panel data technique, the results demonstrate the significant effect of market transparency on foreign capital inflows specifically the FDI as compared to the FPI. An increase in the width and depth analysis based on the Amivest model signifies a high informational transparency, thus shows a lower asymmetric information which consequently leads to the high foreign capital inflows. The results of the study provide information to the policymakers in monitoring capital inflows on the aspect of market transparency and highlight the importance of the stock market microstructure in assessing the asymmetric information for ASEAN+3 countries.

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“…This resulted in public debt remaining at 94% of gross domestic product (GDP) as compared to commencing a downward trajectory. The initiatives of the government for tackling fiscal imbalances are encouraged by the IMF Extended Fund Facility, with complementary activities emphasized on domestic revenues (Al-Smadi, 2018). The new government has worked with the parliament for passing a critical revision to the income tax law in 2018 for addressing the fiscal sustainability issues, intending to gather approximately 0.5% of GDP in additional revenues in 2019, elevating to 1% of GDP from 2020.…”

Section: Legal Issues With Investment Law In Jordanmentioning

confidence: 99%

The legal guarantees to protect foreign investment in Jordan

Helalat

2021

JITLP

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Purpose This paper aims to indicate that the foreign investment system in Jordan includes many provisions that create an appropriate environment for encouraging foreign investments and grant a distinctive treatment for the foreign investor that allows them the status equal to the national investor. Design/methodology/approach This study deals with the protection provided by the Jordan Government for foreign investments to attract foreign investment by studying the guarantees given by Jordan including many legal principles that encourage investment. The legal guarantees for the foreign investor enhance the confidence of the foreign investor in the host country. Findings The system provides a lot of guarantees with respect to non-commercial risks to which the foreign investor may be exposed. Originality/value The paper also clarifies that the role played by bilateral agreements in the field of investments, as these agreements give foreign investments a measure of protection through the guarantees and they are considered as incentives for the investor.

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Determinants of foreign portfolio investment: the case of Jordan

Cited by 21 publications

References 17 publications

Foreign Portfolio Investments, Exchange Rates and Capital Openness: A Panel Data Approach

Foreign Portfolio Investments, Exchange Rates and Capital Openness: A Panel Data Approach

The Influence of Asymmetric Information on Foreign Capital Inflows in Asean Plus Three Countries

The legal guarantees to protect foreign investment in Jordan

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