scholarly journals FDI Inflows, Price and Exchange Rate Volatility: New Empirical Evidence from Latin America

2016 ◽  
Author(s):  
Silvia Dal Bianco ◽  
Loan Nguyen Cong To
Keyword(s):  
Human Capital ◽  
Exchange Rate ◽  
Latin American ◽  
Fixed Effects ◽  
Trade Openness ◽  
Exchange Rate Volatility ◽  
Price Volatility ◽  
Fdi Inflows ◽  
Negative Effect ◽  
The Impact

This paper investigates the impact of price and real exchange rate volatility on Foreign Direct Investment (FDI) inflows in a panel of 10 Latin American and Caribbean countries, observed between 1990 and 2012. Both price and exchange rate volatility series are estimated through the Generalized Autoregressive Conditional Heteroscedasticity model (GARCH). Our results, obtained employing the Fixed Effects estimator, confirm the theory of hysteresis and option value, in so far it is found a statistically significant negative effect of exchange rate volatility on FDI. Price volatility, instead, turns out to be positive but insignificant. Moreover, we show that human capital and trade openness are key for attracting foreign capital. From the policy perspective, our analysis suggests the importance of stabilization policies as well as the one of government credibility in promoting trade openness and human capital formation.

scholarly journals EFEK KETERBUKAAN PERDAGANGAN PADA VOLATILITAS NILAI TUKAR

2019 ◽  
Vol 10 (1) ◽  
pp. 38-45
Author(s):  
Wayrohi Meilvidiri ◽  
Syahruddin Syahruddin ◽  
Romualdus Turu Putra Maro Djanggo
Keyword(s):  
Exchange Rate ◽  
Money Supply ◽  
Trade Openness ◽  
Exchange Rate Volatility ◽  
Normality Test ◽  
Lm Test ◽  
Exchange Rate Movements ◽  
Negative Effect ◽  
The Exchange Rate ◽  
The Impact

This study uses the q to q dataset for the period 2011-2018, to examine the effect of trade openness on the exchange rate, on the other hand variable money supply, inflation and GDP growth and high-low exchange rates (dummy) will smooth the impact of shocks to the exchange rate . Using the OLS econometric estimator to see the effect of variables and the ARCH method to measure the uncertainty of exchange rate movements. Estimation results show that trade openness (open trade index); the money supply (money supply) and the high-low peak value of the exchange rate have a significant positive effect while the growth variable has a significant negative effect on exchange rate volatility. The LM test simultaneously found ARCH in residual data in lag 1 and lag 2. The normality test found abnormal residuals, while the residual heteroscedasticity test showed no ARCH problems in the last residuals.

scholarly journals Impact of the Exchange Rate and Price Volatility on FDI Inflows: Case of Morocco and Turkey

2019 ◽  
Vol 6 (3) ◽  
pp. 87
Author(s):  
Azzouzi Asmae ◽  
Bousselhami Ahmed
Keyword(s):  
Exchange Rate ◽  
Real Exchange Rate ◽  
Exchange Rate Volatility ◽  
Price Volatility ◽  
Fdi Inflows ◽  
Turkish Government ◽  
The Exchange Rate ◽  
The Impact ◽  
Positive Effect ◽  
Real Exchange Rate Volatility

This paper aims to examine empirically the impact of price and real exchange rate volatility on Foreign Direct Investment (FDI) inflows. The sample used is based on the Mediterranean countries of Morocco and Turkey for the period 1990-2017. Empirical findings for Morocco revealing that in both short and long-terms, real exchange rate volatility is negative and highly significant. Price volatility depicts a positive effect, which means that greater volatility of inflation may cause greater marginal profitability of capital and hence increase investment. On the other hand, for Turkey, FDI inflows are found more elastic to domestic price fluctuations. The exchange rate volatility, instead, turned out to have a positive but insignificant effect. In addition, we found that the potential market size rate, institution quality, and infrastructure appear to be the key factors in attracting foreign capital in both countries. As for trade openness, a positive effect on FDI flows is only perceptible in Morocco. In addition, the series of structural reforms carried out by Turkish government have generated real benefits for foreign investors by creating the adequate environment. This has allowed Turkey to overcome the problems it was facing in attracting foreign investment during the period analysed.

scholarly journals Institutions and Foreign Direct Investment: Evidence from Sub-Saharan Africa Regions

2016 ◽  
Vol 9 (4) ◽  
pp. 11
Author(s):  
John Mayanja Bbale ◽  
John Bosco Nnyanzi
Keyword(s):  
Financial Development ◽  
Fixed Effects ◽  
Trade Openness ◽  
Institutional Quality ◽  
The Other ◽  
Sub Saharan Africa ◽  
Capital Account ◽  
Infrastructure Development ◽  
Fdi Inflows ◽  
The Impact

<p>The paper set out to investigate the nexus between institutional quality and inward FDI and how the presence of liberalization and financial development influence this linkage. We build on Dunning’s eclectic paradigm that focuses on locational advantages. A fixed effects approach is employed and the estimation results confirm the crucial role of institutional quality in attracting FDI inflows. However the impact varies with the particular group. In particular, apart from SADC, institutional quality seems to matter significantly in all the other groups especially in EAC and ECOWAS. Additional findings reveal a mixed impact regarding the presence of financial development and liberalization in the institution-FDI nexus: While Trade liberalization policies seem to be at the forefront in ECOWAS and SADC groups, it is credit depth and capital account openness that appear to matter most in EAC. We confirm the resilience of inward FDI during the global crisis and document a positive significant relationship between FDI inflows on the one hand and host market size and infrastructure development on the other. While a one-size-fits-all-policy should be discouraged due to the heterogeneous nature of SSA countries, overall, a comprehensive set of policies designed with caution to improve the institutional quality, the financial system, trade openness and capital account liberalization would be valuable for attracting FDI inflows to SSA.</p>

scholarly journals The Macroeconomic Determinants and the Impact of Sanctions on FDI in Iran

2020 ◽  
Vol 34 (1) ◽  
pp. 15-34
Author(s):  
Mehdi Rasouli Ghahroudi ◽  
Li Choy Chong
Keyword(s):  
Exchange Rate ◽  
Inflation Rate ◽  
Positive Impact ◽  
Trade Openness ◽  
Macroeconomic Factors ◽  
Fdi Inflows ◽  
Long Run ◽  
Macroeconomic Determinants ◽  
The Impact ◽  
Moderating Role

AbstractWe examine the impact of the macroeconomic determinants of foreign direct investment inflows. We also investigate the moderating role of sanctions in FDI inflows into Iran. The results reveal that macro determinants such as infrastructure, exchange rate, inflation rate, investment return, and governance have a long-run effect on FDI inflows in Iran. Our findings also show that GDP growth rate and trade openness have no significant effect on FDI. Our results indicate that sanctions do not have a significant moderating role in the relationship between macroeconomic factors and FDI. Surprisingly, international sanctions have a positive relationship with FDI inflows in Iran. Furthermore, sanctions have a positive impact on the inflation rate and exchange rate in Iran. Finally, our findings show that sanctions have had a significant impact on Iran’s economic growth in recent years due to increasing the severity level of sanctions.

Factors Driving Openness in China Trade: Corruption, Exchange Rate Volatility, and Macro Determinants

2021 ◽  
pp. 2150016
Author(s):  
Thong Trung Nguyen ◽  
Toan Luu Duc Huynh ◽  
Wing-Keung Wong
Keyword(s):  
Exchange Rate ◽  
Positive Impact ◽  
Critical Role ◽  
Trade Openness ◽  
Generalized Method Of Moments ◽  
Exchange Rate Volatility ◽  
Political Stability ◽  
Economic Factors ◽  
Efficient Management ◽  
Negative Effect

Trade openness plays a critical role in the growth of China and its partners. Using a system generalized method of moments (system GMM) estimator and quantile regression, a new viewpoint is presented on trade openness in China for institutional and economic factors over 15 years with 192 economies. The empirical findings provide two contrasting views. Intriguingly, China is seeking to broaden this strategy to countries with less control over corruption and low political stability. By categorizing countries as advanced, emerging, and developing, the study provides the evidence that exchange rate volatility has a negative effect on trade openness, while investment, labor force, and broad money share a positive impact. This study suggests that Chinese policymakers should further boost financial reform to promote trade development. Other countries desirous of greater trade openness with China should have more efficient management of macroscopic economic factors. Finally, the study also examines the two main groups of international offshore financial center from econometric convergence test and club clustering for trade openness in China from the worldwide perspective.

Financial performance of commercial banks in the emerging markets

2022 ◽  
Vol 5 (2, special issue) ◽  
pp. 244-257
Author(s):  
Wondmagegn Biru Mamo ◽  
Habtamu Legese Feyisa ◽  
Mekonnen Kumlachew Yitayaw
Keyword(s):  
Exchange Rate ◽  
Emerging Markets ◽  
Financial Performance ◽  
Commercial Banks ◽  
Banking Sector ◽  
Trade Openness ◽  
Exchange Rate Volatility ◽  
Internet Access ◽  
Net Interest Margin ◽  
The Impact

In the economic growth of a country, the banking sector plays a significant role (Alam, Rabbani, Tausif, & Abey, 2021). The overall objective of the study is to investigate the financial performance of commercial banks in emerging markets. The study tried to see the impact of governance, exchange rate volatility, trade openness, and internet access on the financial performance of commercial banks in Ethiopia during the years from 2014 to 2019. The study employed a random-effects model using balanced panel data. The result indicated that composite governance index, trade openness, and internet access have a positive and statistically significant effect on the financial performance of commercial banks as measured by their return on assets. However, the exchange rate volatility has a negative and statistically significant effect on the financial performance of commercial banks. On the other hand, the result of bank-specific variables considered in the study such as profit margin, asset utilization, net interest margin, overhead efficiency, and numbers of branches have a positive and statistically significant effect on the financial performance of commercial banks. Contrarily, the equity multiplier ratio has a negative and significant effect on the financial performance of commercial banks

Exchange rate volatility and non-oil exports in Nigeria: An empirical investigation

2017 ◽  
Vol 5 (2) ◽  
pp. 5
Author(s):  
Sa’ad Babatunde Akanbi ◽  
Halimah Adedayo Alagbe ◽  
Hammed Agboola Yusuf ◽  
Musibau Hammed Oluwaseyi
Keyword(s):  
Exchange Rate ◽  
Export Performance ◽  
Exchange Rate Volatility ◽  
Flexible Exchange Rate ◽  
Arch Model ◽  
Rate System ◽  
Oil Exports ◽  
Oil Export ◽  
Negative Effect ◽  
The Impact

The adoption of a flexible exchange rate system since 1986 in Nigeria has made the country witnessed varying rate of the naira vis-à-vis the U.S dollar. This paper examines exchange rate volatility with ARCH model and its various extensions (GARCH, TGARCH, and EGARCH) using quarterly exchange rate series from 1986-Q1 to 2014-Q4.The impact of exchange rate volatility on non-oil exports was also examined using Error Correction Model (ECM) with two different measures of volatility. The results obtained confirm the existence of exchange rate volatility and also found a significant negative effect on non-oil export performance in Nigeria. Therefore, the Nigerian government should ensure an appropriate policy mix that not only ensures a stable and realistic exchange rate but also conducive atmosphere for production and exportation.

scholarly journals The Effect of Exchange Rate Volatility on Economic Growth: Case of the CEE Countries

2020 ◽  
Vol 13 (8) ◽  
pp. 177
Author(s):  
Fatbardha Morina ◽  
Eglantina Hysa ◽  
Uğur Ergün ◽  
Mirela Panait ◽  
Marian Catalin Voica
Keyword(s):  
Economic Growth ◽  
International Trade ◽  
Exchange Rate ◽  
Fixed Effects ◽  
Exchange Rate Volatility ◽  
Real Effective Exchange Rate ◽  
Annual Data ◽  
Real Economy ◽  
The Exchange Rate ◽  
The Impact

The exchange rate is a key macroeconomic factor that affects international trade and the real economy of each country. The development of international trade creates conditions where volatility comes with the exchange rate. The purpose of this paper is to examine the effect of real effective exchange rate volatility on economic growth in the Central and Eastern European countries. Additionally, the effect, through three channels of influence on economic growth which vary on the measurement of exchange rate volatility, is examined. The study uses annual data for fourteen CEE countries for the period 2002–2018 to examine the nature and extends the impact of such movements on growth. The empirical findings using the fixed effects estimation for panel data reveal that the volatility of the exchange rate has a significant negative effect on real economic growth. The results appear robust with alternative measures of exchange rate volatility such as standard deviation and z-score. This paper suggests that policymakers should adopt different policies to keep the exchange rate stable in order to foster economic growth.

scholarly journals Effects of Exchange Rate Volatility on Trade: Evidence from West Africa

2020 ◽  
Vol 12 (3(J)) ◽  
pp. 32-52
Author(s):  
Pabai Fofanah
Keyword(s):  
Exchange Rate ◽  
West Africa ◽  
Trade Balance ◽  
Fixed Effects ◽  
Random Effect ◽  
Exchange Rate Volatility ◽  
West African ◽  
African Countries ◽  
Goods And Services ◽  
The Impact

The objective of this paper has been to investigate the impact of exchange rate volatility on trade in the context of exports, imports, and the trade balance in West Africa. Applying the pooled Ordinary Least Square, the fixed effects, and the random effect models, and obtaining robust estimates for export and trade balance models by employing xtgls, panels (correlated) Corr (ar1), and adopting xtscc, fe regression with Driscoll-Kraay standard error to estimate the import model. The empirical results show that the impact of exchange rate volatility on exports and imports is insignificant. However, the result of the trade balance model shows a positive and significant link between exchange rate volatility and the trade balance. Thus, suggesting that traders tend to engage more in export activities with an increase in exchange rate volatility. Also, the analysis suggests that depreciation of the real exchange rate will lead to a decrease in exports. Thereby, confirming the limited production capability and heavy reliance on imported goods and services. Hence, this study recommends diversification of production activities and adopting strategies aiming at reducing dependence on imported goods and services. The empirical result shows a positive association between an increase in domestic economic activities of trading partners and exports of the West African countries. This implies that West African countries must engage in trade with countries that have a high economic growth rate. The result also shows a positive link between inflation rate and imports. This suggests the implementation of effective monetary policies geared towards controlling inflation.

scholarly journals The impact of foreign exchange movements on Turkish textile sector

2019 ◽  
Vol 70 (03) ◽  
pp. 291-296
Author(s):  
YUSUF KAYA ◽  
GIZEM GÜNAYDIN KARAKAN ◽  
EMILIA VISILEANU
Keyword(s):  
Exchange Rate ◽  
Firm Performance ◽  
Firm Size ◽  
Exchange Rate Volatility ◽  
Geographical Location ◽  
High Tech ◽  
Firm Age ◽  
Negative Effect ◽  
The Impact ◽  
Textile Sector

Due to importance of global supply chain and high-tech exports, importance of new developing markets is gradually increasing. Turkey keeps the strategic importance for textile sector being in the center of Balkans, Asia, Middle East, North Africa, Eastern Europe and Russia. The geographical location allowing trade in the region makes the country much more advantageous than its competitors. However, devaluation and the exchange rate volatility of Turkish Lira in 2018 have been seriously affecting Turkish textile sector. This study aims to determine the impact of exchange rate fluctuation on Turkish textile firms’ performance between the years of 2013 and 2017. Additionally, multiple regression analysis was done in order to investigate the impact of firms’ performance such as firm age and firm size on performance of the textile firms. According to results, it was observed that exchange rate volatility had a negative effect on the firm performance and the firm size had a negative effect on firm performance while the firm age did not have any influence on firms’ performance significantly.

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