FDI, Stock Market Development and Institutional Quality: An African Perspective
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Authors
Makoni, Patricia Lindelwa
Makoni, Patricia Lindelwa
Issue Date
2021-09-06
Type
Article
Language
en
Keywords
FDI , stock market development , institutional quality , Africa , foreign direct investment
Alternative Title
Abstract
This paper empirically sought to establish the existence of relationships between foreign direct investment, stock market development and institutional quality, respectively. The study adopted a multiple regression analysis, using a panel of nine African countries between 2009 and 2016. Using the random effects model, we find that the relationship between foreign direct investment and stock market development is positive and statistically significant. On the other hand, institutional quality reflected a negative effect on FDI inflows, implying that countries with low quality institutions would struggle to attract inward FDI. The policy implications are that host countries’ policy makers should eliminate or reduce any practices that deter foreign direct investments, such as capital controls and risk of expropriation (institutions), while simultaneously improving the domestic financial infrastructure and related regulations.
Description
Citation
Makoni, P. L. (2021). FDI, stock market development and institutional quality: an African perspective. International Journal of Financial Research, 12 (5), 141-150. https://doi.org/10.5430/ijfr.v12n5p141
Publisher
Sciedu Press
License
Journal
Volume
Issue
PubMed ID
DOI
ISSN
1923-4031