The long-run impact of monetary policy uncertainty and banking stability on inward FDI in EU countries

Albulescu, Claudiu Tiberiu; Ionescu, Adrian

doi:10.1016/j.ribaf.2017.07.133

Cited by 25 publications

(25 citation statements)

References 68 publications

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“…The study recommended the need to improve public financial operations to ensure a sound economic environment Investors. Albulescu and Ionescu (2018) examined the longrun impact of monetary policy and banking stability on FDI inwards in 16 EU countries over the period 2001-2015. The paper used co integration techniques such as panel data FMOLS and DOLS.…”

Section: Literature Reviewmentioning

confidence: 99%

The Impact of Monetary Policy and Tax Revenues on Foreign Direct Investment Inflows: An Empirical Study on Jordan

Mukhtarov¹,

Alalawneh²,

Azizov³

et al. 2020

Acta Univ. Agric. Silvic. Mendelianae Brun.

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The study examines the impact of monetary policy (proxied by money supply and interest rate) and tax revenue on foreign direct investment (FDI) in Jordan employing time series data period from 1991 to 2017. The Vector Error Correction Model (VECM), the Canonical Cointegrating Regression (CCR) and the Fully Modified Ordinary Least Squares (FMOLS) methods are applied in empirical estimations. Estimation results reveal that money supply has a positive and statistically significant impact on the FDI while, tax revenue has a negative impact on FDI in Jordan. Also, we find that the impact of interest rate is statistically insignificant.The results of current study are useful for the policymakers to formulate appropraite policies and support the literature for further researches in the case of developing economies.

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Section: Literature Reviewmentioning

confidence: 99%

The Impact of Monetary Policy and Tax Revenues on Foreign Direct Investment Inflows: An Empirical Study on Jordan

Mukhtarov¹,

Alalawneh²,

Azizov³

et al. 2020

Acta Univ. Agric. Silvic. Mendelianae Brun.

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“…Impulse response function 3.2. Summary of model 2 result (short-and long-run relationship) Table 4 presents the ARDL bound test using output (GDP) and employment (EMP) as dependent variables 4 . Evidence from the results showed no 4 The model selections criteria result is not presented in this study, however, can be provided if requested.…”

Section: Resultsmentioning

confidence: 99%

“…Equation (4) shows that output is positively related to capital, labor and money supply. Evidence from the empirical literature shows that money supply affects the economy through the following credit channels: the interest rate, broad money supply and total bank deposit (Aastveit, Natvik, & Sola, 2017; Anwar & Nguyen, 2018; Barro, 2007).…”

Section: Theoretical Frameworkmentioning

confidence: 99%

The credit channels of monetary policy transmission: implications on output and employment in Nigeria

Asaleye

Popoola

Lawal

et al. 2018

Banks and Bank Systems

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There has been an increasing trend in the unemployment rate despite the growth rate witnessed. Monetary policy is presumed as one of the ways to improve the situation. Likewise, the relationship between monetary policy and employment has generated controversial debates in the literature. Though its connection has been extensively studied, however, the implications of monetary policy in respect to time frame perspectives on employment and output have not been widely addressed in the literature. This study provides evidence on shock effects, long and short-run impacts of monetary policy transmission through the credit channels on output and employment in Nigeria within the period of 1981 to 2016 using the Structural Vector Autoregression and Autoregressive distributed lags (ARDL). Evidence from the forecast error shock showed that variations in monetary policy indicators affect output more than employment in the first two periods; however, it affects employment more afterwards. The ARDL results show no evidence of co-integration when output is used as the dependent variable; conversely, cointegration exists when employment is used as the dependent variable. The monetary policy indicators: money supply, bank deposit liability and interest rate are statistically and economically significant with employment in the long run. In the short run, money supply and interest rate are economically and statistically significant. The findings revealed that the Nigerian government can maximize the long-run benefits of monetary policy through the credit channels on employment. Hence, there is a need for policymakers to look beyond short-run gain and promote long-run employment via monetary policy among others.

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“…So, it is commonly recognized in the literature that a stable banking sector mobilizes and allocates savings necessary for investment activities by firms, thereby providing the channel for supplying capital for economic growth (King & Levine, 1993; Levine, 2005; Manu, Adjasi, Abor, & Harvey, 2011). Albulescu and Ionescu (2018) corroborated that banking sector stability facilitates the investor's access to finance and their investment decision in the EU countries. Its role is even more important in post‐transition EU countries that are more sensitive to economic volatility than developed ones.…”

Section: Conceptual Background With the Literature Reviewmentioning

confidence: 87%

Banking sector stability and economic growth in post‐transition European Union countries

2020

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Economic growth is considered to be an essential means for poverty alleviation and improving countries' well‐being. Disturbances and instability in the banking sector may jeopardize financial stability and generate adverse, considerable and long‐lasting consequences therefor. This study analyzed the dynamic and causal effects of various indicators of banking sector stability on economic growth by employing new generation panel cointegration and causality tests in post‐transition European Union countries over the period 1998–2016. Taking into account cross‐sectional dependence between countries, the presence of heterogeneity in the errors, endogeneity and structural breaks, the long and short run analyses revealed the cointegration relation between the variables, the statistically significant positive effect of banking sector stability on economic growth and the efficiency of the error correction mechanism. The causality analysis disclosed the opposite causality direction between the particular banking sector stability indicators and economic growth, suggesting that banking sector stability is a complex, hierarchically structured multidimensional construct. Its different dimensions require different policy responses aiming at preventing future shocks and mitigating the adverse effects, while encouraging economic growth.

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The long-run impact of monetary policy uncertainty and banking stability on inward FDI in EU countries

Cited by 25 publications

References 68 publications

The Impact of Monetary Policy and Tax Revenues on Foreign Direct Investment Inflows: An Empirical Study on Jordan

The Impact of Monetary Policy and Tax Revenues on Foreign Direct Investment Inflows: An Empirical Study on Jordan

The credit channels of monetary policy transmission: implications on output and employment in Nigeria

Banking sector stability and economic growth in post‐transition European Union countries

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