The impact of financial sector development on foreign direct investment in emerging markets
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Authors
Tsaurai, Kunofiwa
Issue Date
2017-02
Type
Thesis
Language
en
Keywords
Foreign direct investment , Financial sector development , Endogeneity , Threshold , Emerging markets
Alternative Title
Abstract
The study investigates the financial sector development threshold levels that would
influence FDI inflows. The threshold levels identified are 41.27% of stock market
capitalisation for stock market turnover, 53.55% of GDP for stock market value traded,
121.53% of GDP for stock market capitalisation, 114.43% of GDP for domestic credit to
private sector by banks, 144.06% of GDP for domestic credit provided by financial sector,
0.22% of GDP for outstanding domestic private debt securities and 41.26% of GDP for
outstanding domestic public debt securities. The results show that higher stock market
and banking sector development above the threshold level positively and significantly
influence FDI inflows whilst the influence of lower stock market and banking sector
development on FDI inflows was weak and less significant. Levels of private bond market
development equal to or greater than the threshold level are found to have a positive but
non-significant impact on FDI inflows whereas private bond market development levels
less than the threshold has a weaker positive and non-significant influence on FDI inflows.
On the contrary, public bond market development levels equal to or greater than the
threshold level negatively influenced FDI inflows whilst levels of public bond market
development less than the threshold positively but non-significantly attracted FDI inflows
into emerging markets.
Description
Citation
Tsaurai, Kunofiwa (2017) The impact of financial sector development on foreign direct investment in emerging markets, University of South Africa, Pretoria, <http://hdl.handle.net/10500/22993>