Foreign Direct Investment, Financial Development and Economic Growth: A Panel Data Analysis

This study aims to determine the effect of macroeconomic factors on Islamic bank savings funds in Indonesia. Macroeconomic variables used; economic growth, government debt, exchange rates, trade balance, money supply (M2), and foreign direct investment. Macroeconomic data is obtained from the publication of the Central Statistics Agency (BPS). Depositors’ fund data is obtained from the Financial Services Authority (OJK). The population consists of all Islamic commercial banks and Islamic business units. The sampling technique used total sampling, and data analysis was performed using multiple linear regression. Observation data from January 2005 to December 2019 used quarterly data. The results show that government debt and money supply (M2) positively and significantly affect depositors of Islamic banks in Indonesia. In contrast, economic growth, exchange rates, trade balance, and foreign investment do not significantly affect Islamic bank deposit funds in Indonesia. Keywords: Macroeconomic Factors, Depositor Funds, Sharia BankJEL Classification: C3, E00, Z00

show abstract

The Contribution of Fdi and Financial Development on Economic Growth in Sri Lanka

Maheswaranathan

Jeewanthi

2021

Int. J. Eng. Tech. Mgmt. Res.

View full text Add to dashboard Cite

The present study investigates the relationship between financial development, Foreign direct investment and economic growth in Sri Lanka for the period 1980 to 2019 by applying the Augmented Dickey-Fuller Unit root test along with the ARDL approach in process of achieving the desired objective. The outcome of this study shows that except GDP and FDI all other variables such as Capital investment as a percent of GDP (CI), Bank credit to the private sector as a percent of GDP (BCP), net foreign direct investment inflows in % of GDP (FDI) are stationary at first difference. The findings reveal that net foreign direct investment inflows are a positive relationship with economic growth in the long run. It means a one percent increase in net foreign direct investment inflows increases the GDP by 0.826439 percent. At the same time, a one percent increase in bank credit to the private sector decreases the GDP by 0.864320 percent. Moreover, in the short run FDI, CI and BCP have a positive and significant impact on GDP. Diagnostic tests such as normality test, heteroskedasticity and serial autocorrelation are employed to validate parameter estimation outcomes. Further, the stability of the variables confirms by the CUSUM test. The country should propose Strategies to boost the growth of efficient domestic financial institutions and encourage policy to attract greater FDI inflows that meet the needs of the knowledge-based economy.

show abstract

Foreign Direct Investment, Financial Development and Economic Growth: A Panel Data Analysis

Cited by 3 publications

References 40 publications

Foreign Direct Investment, Financial Development, Exchange Rate Volatility: An Analysis of the Malaysian Inequitable Development

Foreign Direct Investment, Financial Development, Exchange Rate Volatility: An Analysis of the Malaysian Inequitable Development

Macroeconomic Factors That Affect Depositor Funds of Sharia Bank in Indonesia

The Contribution of Fdi and Financial Development on Economic Growth in Sri Lanka

Contact Info

Product

Resources

About