FDI and Local Financial Market Development:A Granger Causality Test Using Panel Data

Abdel Aal Mahmoud, Ashraf (2010): FDI and Local Financial Market Development:A Granger Causality Test Using Panel Data.

Abstract

This paper reports the findings of Granger causality tests on the relationship between foreign direct investment (henceforth, FDI) and local financial market development across 62 countries from 1996 to 2007. In this paper we explore whether local financial market development is important in catalyzing the flow of foreign direct investment. findings results are robust to different measures of financial market development. Furthermore, the results indicate that most of the causal links are found in Non OECD, Low income and Lower middle Income countries.

• Item Type: MPRA Paper
• Language: English
• Keywords: FDI; Financial market, Capital markets; Credit markets
• Subjects: P - Economic Systems > P4 - Other Economic Systems > P45 - International Trade, Finance, Investment, and Aid; G - Financial Economics > G1 - General Financial Markets > G15 - International Financial Markets; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O16 - Financial Markets ; Saving and Capital Investment ; Corporate Finance and Governance; F - International Economics > F2 - International Factor Movements and International Business > F21 - International Investment ; Long-Term Capital Movements; G - Financial Economics > G1 - General Financial Markets > G10 - General

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