Foreign capital inflows, economic growth and stock market capitalization in Asian countries: an ARDL bound testing approach

2012 ◽  
Vol 48 (1) ◽  
pp. 375-385 ◽  
Author(s):  
Syed Ali Raza ◽  
Syed Tehseen Jawaid
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Foreign Capital ◽  
Capital Inflows ◽  
Asian Countries ◽  
Market Capitalization ◽  
Foreign Capital Inflows ◽  
Testing Approach ◽  
Stock Market Capitalization

Is stock market sensitive to foreign capital inflows and economic growth?

2015 ◽  
Vol 8 (3) ◽  
pp. 142-164 ◽  
Author(s):  
Syed Ali Raza ◽  
Syed Tehseen Jawaid ◽  
Sahar Afshan ◽  
Mohd Zaini Abd Karim
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Foreign Capital ◽  
Capital Inflows ◽  
Series Data ◽  
Content Type ◽  
Market Capitalization ◽  
Long Run ◽  
Foreign Capital Inflows ◽  
Stock Market Capitalization

Purpose – The purpose of this study is to investigate the impact of foreign capital inflows and economic growth on stock market capitalization in Pakistan by using the annual time series data from the period of 1976 to 2011. Design/methodology/approach – The autoregressive distributed lag bound testing cointegration approach, the error correction model and the rolling window estimation procedures have been performed to analyze the long run, short run and behavior of coefficients, respectively. Findings – Results indicate that foreign direct investment (FDI), workers’ remittances and economic growth have significant positive relationship with the stock market capitalization in long run as well as in short run. Results of the dynamic ordinary least square and the fully modified ordinary least square suggest that the initial results of long-run coefficients are robust. Results of variance decomposition test show the bidirectional causal relationship of FDI and economic growth with stock market capitalization. However, unidirectional causal relationship is found in between workers’ remittances and stock market capitalization. Practical implications – It is suggested that in Pakistan, investors can make their investment decisions through keeping an eye on the direction of the considered foreign capital inflows and economic growth. Originality/value – This paper makes a unique contribution to the literature with reference to Pakistan, being a pioneering attempt to investigate the effects of foreign capital inflows and economic growth on stock market by using long time series data and applying more rigorous techniques.

scholarly journals THE INFLUENCE OF ASYMMETRIC INFORMATION ON FOREIGN CAPITAL INFLOWS IN ASEAN PLUS THREE COUNTRIES

2021 ◽  
Vol 28 ◽  
Author(s):  
Raihan Ashikin Mohd Nor ◽  
Hawati Janor ◽  
Mohd Hasimi Yaacob ◽  
Noor Azuan Hashim
Keyword(s):  
Asymmetric Information ◽  
Stock Market ◽  
Market Microstructure ◽  
Foreign Capital ◽  
Capital Inflows ◽  
Cross Sectional ◽  
Foreign Portfolio Investment ◽  
Market Transparency ◽  
Depth Analysis ◽  
Foreign Capital Inflows

This paper examines the influence of asymmetric information on foreign capital inflows in ASEAN PLUS THREE (ASEAN+3) countries. Linking capital flows to stock market setting, it substantiates other efforts concerning the debatable issues of the effect of asymmetric information on foreign direct investment (FDI) and foreign portfolio investment (FPI). The asymmetric information is captured through the stock market microstructure perspective on the width and depth dimensions using highly frequency cross sectional data from year 2000 to 2015. Roll and Amivest models are employed to quantify the width and depth aspects of the asymmetric information. Employing the panel data technique, the results demonstrate the significant effect of market transparency on foreign capital inflows specifically the FDI as compared to the FPI. An increase in the width and depth analysis based on the Amivest model signifies a high informational transparency, thus shows a lower asymmetric information which consequently leads to the high foreign capital inflows. The results of the study provide information to the policymakers in monitoring capital inflows on the aspect of market transparency and highlight the importance of the stock market microstructure in assessing the asymmetric information for ASEAN+3 countries.  

scholarly journals Financial Liberalization, Economic Growth and Investment Strategy: Lessons from Taiwan for New Industrial Countries

2015 ◽  
Vol 3 (2) ◽  
pp. 188 ◽  
Author(s):  
Yu-Wei Lan ◽  
Dan Lin ◽  
Lu Lin
Keyword(s):  
Economic Growth ◽  
Institutional Investors ◽  
Foreign Capital ◽  
Investment Strategy ◽  
Capital Inflows ◽  
Investment Efficiency ◽  
The Real ◽  
Foreign Capital Inflows ◽  
Foreign Institutional Investors ◽  
The Impact

<p><em>To examine the impact of foreign capital inflows on Taiwan’s economy after internet bubbles of 2000, this study adopts data from the first quarter of 2001 to the second quarter 2015 to test if foreign capital inflows have positive impacts on Taiwan’s economic growth. This study also uses program trading and aims to prove that with financial liberalizations, the investment efficiency of foreign institutional investors is better than domestic institutional investors.</em></p><p><em>The results from the error correction model shows that capital formation, domestic savings and foreign direct investment all have positive relationships with the real economic growth. However, the rate of financing and foreign debt and depreciation all have negative relationships with the real economic growth. The results are all statistically significant. Hence, they do not completely support the hypothesis that foreign capital inflows are beneficial for economic growth.</em></p><p><em>Moreover, this study proves that the futures market in Taiwan is not strong-form market efficient. This result provides support for the hypothesis that the investment efficiency of foreign institutional investors is higher than that of domestic institutional investors. Investors can therefore raise their investment performance by following the investment strategies of foreign institutional investors.</em></p>

Foreign Capital and Economic Growth

1988 ◽  
Vol 23 (3) ◽  
pp. 302-310
Author(s):  
Raj Aggarwal
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Global Change ◽  
Foreign Capital ◽  
Development Aid ◽  
Capital Inflows ◽  
Private Capital ◽  
Competitive Markets ◽  
Poor Countries ◽  
Foreign Capital Inflows

In the current environment of significant global change, how can declining levels of development aid and private capital inflows be best used to promote economic growth in the developing countries? This question is addressed here and traditional analysis of this topic is complemented by taking a perspective that focuses on the limitations of how development aid and foreign capital inflows are usually allocated. It is suggested here that poor countries can benefit from a greater use of competitive markets to allocate development aid and private capital inflows.

scholarly journals Foreign Capital and Economic Performance of Pakistan

2002 ◽  
Vol 7 (1) ◽  
pp. 1-32
Author(s):  
Minh Hang Le ◽  
Ali Ataullah
Keyword(s):  
Developing Countries ◽  
Human Capital ◽  
Foreign Aid ◽  
Economic Performance ◽  
Foreign Capital ◽  
Private Investment ◽  
Capital Inflows ◽  
Asian Countries ◽  
Foreign Private Investment ◽  
Foreign Capital Inflows

This paper reviews the trends of two types of foreign capital inflows, namely foreign aid and foreign private investment, to Pakistan. Like other developing countries, the volume of foreign aid to Pakistan has been decreasing. Meanwhile foreign private investment to Pakistan has increased, though not as sharply as that to other developing Asian countries. The study finds that the impacts of foreign capital, aid and private investment on the economic performance of Pakistan have been insignificant. This paper suggests that these consequences are due to the inadequate development of domestic institutional structure, human capital, and indigenous entrepreneurship.

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