The impact of foreign direct investment inflows on nonperforming loans: the case of UAE

2020 ◽  
Vol 17 (4) ◽  
pp. 241-257
Author(s):  
Peterson K. Ozili ◽  
Asma Salman ◽  
Qaisar Ali
Keyword(s):  
Foreign Direct Investment ◽  
United Arab Emirates ◽  
Direct Investment ◽  
Banking Sector ◽  
Ordinary Least Squares ◽  
Combined Effect ◽  
Fdi Inflows ◽  
Nonperforming Loans ◽  
Loan Quality ◽  
The Impact

The banking sector is at risk of worsening loan quality, which is a major threat to the financial system’s stability. The impact of foreign direct investment (FDI) inflows on nonperforming loans (NPLs) in the United Arab Emirates (UAE) is empirically investigated in this study. The data from 2008 to 2017 are collected and analyzed through the ordinary least squares (OLS) technique. The findings reveal that FDI inflows reduced the size of NPLs during the economic crisis. Also, the combined effect of higher FDI inflows and bank efficiency reduced the size of NPLs for banks, while the combined effect of FDI inflows and better institutions, such as strong regulatory quality, did not reduce the size of NPLs but rather increased the size of NPLs. The findings have implications and contribute to the literature to establish a relationship between FDI inflows and NPLs by examining the relationship between FDI inflows and NPLs in the context of banks in the UAE.

scholarly journals Impact of Foreign Direct Investment Inflows on Economic Growth; the Case of the Republic of Seychelles

2019 ◽  
Author(s):  
Yusheng Kong ◽  
Sampson Agyapong Atuahene ◽  
Geoffrey Bentum-Mican ◽  
Abigail Konadu Aboagye
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Least Square ◽  
Small Island ◽  
Host Countries ◽  
Fdi Inflows ◽  
Economic Trends ◽  
The Republic ◽  
The Impact

This paper aims to research whether there is link between FDI inflows and Economic growth in the Republic of Seychelles Island. The ordinary least square results obtained shows that in the impact of FDI inflows on economic growth is low. Small Island Developing States attracts less FDI inflow because they are limited to few resources that attracts overseas firms which results in retarded development. The research lighted that impact of foreign direct investment on host countries does not only depend on the quality and quantity of the FDI inflows but some other variables such as the internal policies and the management skills, market structures, economic trends among others.

scholarly journals The Use of Auto-Regressive Distributed Lag Method in Investigating The Impact of Interest Rate on Foreign Direct Investment in Yemen for the Period 1990-2018

2020 ◽  
Vol 26 (123) ◽  
pp. 145-157
Author(s):  
Saif Sallam Alhakimi
Keyword(s):  
Foreign Direct Investment ◽  
Interest Rate ◽  
Interest Rates ◽  
Direct Investment ◽  
Inflation Rate ◽  
Trade Openness ◽  
Fdi Inflows ◽  
Distributed Lag ◽  
Auto Regressive ◽  
The Impact

 Foreign direct investment has seen increasing interest worldwide, especially in developing economies. However, statistics have shown that Yemen received fluctuating FDI inflows during the period under study. Against this background, this research seeks to determine the relationship and impact of interest rates on FDI flows. The study also found other determinants that greatly affected FDI inflows in Yemen for the period 1990-2018. Study data collected from the World Bank and International Monetary Fund databases. It also ensured that the time series were made balanced and interconnected, and then the Auto Regressive Distributed Lag method used in the analysis. The results showed that the interest rates and inflation rate harmed FDI flows and, therefore, could not be used for policymaking purposes. The research also discovered that GDP growth and trade openness are the main determinants of foreign direct investment in Yemen. Trade openness policies should be encouraged, and GDP growth facilitated if the economy is to achieve long-term FDI flows. Purpose –The purpose of the paper is to discover the impact of interest rate on foreign direct investment with a combination of the exchange rate, inflation, gross domestic product, and trade openness. Design/methodology/approach – The paper implements the Auto Regressive Distributed Lag (ARDL)-Bounds testing approach to analyze maintaining the time series properties in terms of stationarity. Findings – The results indicate that there is a long-run equilibrium between the Foreign Direct Investment and the explanatory variables. Furthermore, the significant factors influencing, positively, FDI in Yemen are Growth domestic product, Exchange rate, and Trade openness. In contrast, both the Interest rate and Inflation rate have a substantial negative impact on Foreign Direct Investment. Practical implications – Policymakers in Yemen advised reconsidering many of the general state policies, including investment policies, financial and administrative governance, and monetary policy that focuses on maintaining an adequate interest rate and reduce the rate of inflation. Originality/value – As for the case of Yemen, this the first study empirically explores the impact of interest rate and the foreign direct investment using the Auto Regressive Distributed Lag method aiming for more reliable results.

Foreign Direct Investment, Financial Development, and Economic Growth Nexus in Bangladesh

2020 ◽  
pp. 056943452093867
Author(s):  
Md. Noman Siddikee ◽  
Mohammad Mafizur Rahman
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Financial Development ◽  
Direct Investment ◽  
Banking Sector ◽  
Negative Impact ◽  
Capital Formation ◽  
Long Run ◽  
Short Run ◽  
The Impact

This article aims to explore the short- and long-run impact of foreign direct investment (FDI), financial development (FD), capital formation, and the labor forces on the economic growth of Bangladesh. We applied the Granger causality test and Vector Error Correction Model (VECM) for this study. The World Bank data for the period of 1990–2018 are taken into account for the analysis. Our findings suggest, in the long run, capital formation has a positive impact, and in the short run, it has a negative impact on gross domestic product (GDP) implying a lack of higher efficiency is persisting in capital management. Similarly, labor forces have an insignificant impact in the short run and a negative impact in the long run on GDP, which confirms the presence of a huge number of unskilled laborers in the economy with inefficient allocation. The impact of FD is found tiny positive in the short run but large negative in the long run on GDP indicating vulnerability of banking sector. These also confirm fraudulence and inefficient use of the domestic credit supplied to the private sector. The impact of FDI is approximately null both in the short and long run, indicating Bangladesh fails to achieve the long-term benefits of FDI. Finally, this study suggests using FDI more in the capital intensive project of the public–private partnership venture than infrastructural development only and also improving the credit management policy of the banking sector. JEL Classifications: F21, F43, J21

scholarly journals The impact of financial sector reforms on foreign direct investment in an emerging economy: empirical evidence from Ghana

2020 ◽  
Vol 2 (4) ◽  
pp. 271-284
Author(s):  
Kofi Kamasa ◽  
Isaac Mochiah ◽  
Andrews Kingsley Doku ◽  
Priscilla Forson
Keyword(s):  
Foreign Direct Investment ◽  
Empirical Evidence ◽  
Direct Investment ◽  
Least Squares Method ◽  
Financial Sector ◽  
Ordinary Least Squares ◽  
Sector Reform ◽  
Content Type ◽  
Financial Sector Reform ◽  
The Impact

Purpose This paper aims to empirically investigate the impact that financial sector reforms have on foreign direct investment (FDI) in Ghana. Design/methodology/approach Composite financial sector reform index was constructed, which was made up of various forms of reform policies that were implemented from 1987 to 2016. The auto regressive distributed lag bounds test was used to establish cointegration between variables. Having controlled for other covariates that affect FDI such as trade openness, exchange rate, gross domestic product per capita, inflation and by using the fully modified ordinary least squares method, the estimations are robust as it uses a semi-parametric correction to avoid for any possible issues of endogeneity and serial correlation. Findings Results from the paper reveal that financial sector reform deepening boost FDI with a 2.167% increase in FDI following from a unit percentage improvement of the financial sector reforms. Considering the various categories of reforms, the results reveal that competitive reforms have the highest impact on FDI followed by privatization reforms with positive and significant elasticity coefficients of 2.174% and 0.726%, respectively. Behavioral reforms revealed a positive effect on FDI, albeit insignificant. Originality/value The paper contributes to policy by providing empirical evidence on the effect of financial sector reform on FDI inflows in Ghana. As far as the review of literature is concerned, this paper provides the foremost empirical evidence on the subject with sole emphasis on Ghana. Thus, this paper suggests the deepening of the financial sector reforms, improving competition and maintaining macroeconomic stability.

scholarly journals Trade openness and foreign direct investment in Africa

2014 ◽  
Vol 9 (3) ◽  
pp. 355-370 ◽  
Author(s):  
T Kandiero ◽  
M Chitiga
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Trade Openness ◽  
Empirical Work ◽  
African Countries ◽  
Fdi Inflows ◽  
Services Sector ◽  
Openness To Trade ◽  
The Impact ◽  
Poor Infrastructure

Africa’s share of foreign direct investment (FDI) has lagged behind other regions in the world, despite a sharp increase in FDI inflows to the region in 2001. Factors contributing to this circumstance include perceptions of high corruption, weak governance and poor infrastructure. The motivation of this paper is to investigate the impact of openness to trade on the FDI inflow to Africa. In addition to economy-wide trade openness, we also analyse the impact on FDI of openness in manufactured goods, primary commodities and services. The empirical work uses cross-country data from selected African countries observed over four periods: 1980-1985, 1985-1990, 1990- 1995 and 1995-2001. We find that the FDI to GDP ratio responds well to increased openness in the whole economy and in the services sector in particular.

CONSTRAINTS TO FOREIGN DIRECT INVESTMENT IN INDIAN HOSPITALS

2010 ◽  
Vol 01 (01) ◽  
pp. 121-143 ◽  
Author(s):  
RUPA CHANDA
Keyword(s):  
Foreign Direct Investment ◽  
Health Insurance ◽  
Foreign Investment ◽  
Direct Investment ◽  
Medical Equipment ◽  
Domestic Investment ◽  
Fdi Inflows ◽  
Domestic Constraints ◽  
Insurance Penetration ◽  
The Impact

This paper examines the impact of a liberalised foreign direct investment (FDI) regime in Indian hospitals on FDI inflows. The paper shows that there is hardly any FDI in Indian hospitals due to domestic constraints such as high initial establishment costs, low health insurance penetration, manpower shortages, high cost of medical equipment, and regulatory deficiencies. These constraints also impede domestic investment in hospitals. The paper concludes that a liberal foreign investment regime may not result in increased FDI inflows if regulatory and structural impediments continue to constrain investment in the host economy. Investment liberalisation must thus be supplemented by domestic regulatory reforms to create an environment that is conducive to all investors.

scholarly journals The Impact of Foreign Direct Investment on Environment Degradation: Evidence from Emerging Markets in Asia

2019 ◽  
Vol 16 (9) ◽  
pp. 1636 ◽  
Author(s):  
Anh Hoang To ◽  
Dao Thi-Thieu Ha ◽  
Ha Minh Nguyen ◽  
Duc Hong Vo
Keyword(s):  
Foreign Direct Investment ◽  
Emerging Markets ◽  
Least Squares ◽  
Direct Investment ◽  
Panel Cointegration ◽  
Ordinary Least Squares ◽  
Kuznets Curve ◽  
Strong Impact ◽  
The Impact ◽  
Environment Degradation

This study is conducted to examine the concerns of the foreign direct investment (FDI) causing environment degradation and also to test the validity of the traditional Environmental Kuznets Curve (EKC) in the context of emerging markets in the Asian region. Data of these countries from 1980–2016 are utilised. This study employs panel cointegration Fully Modified Ordinary Least Squares (FMOLS), which treats the endogeneity problem, and its estimators are adjusted for serial correlation. Moreover, this study also uses panel Dynamic Ordinary Least Squares (DOLS), which includes contemporaneous value, leads and, lags of the first difference of the regressors to correct endogeneity problems and serial correlations. Findings from this study indicate that the pollution heaven hypothesis and the EKC curve are generally valid in the region. In addition, FDI has a strong impact on the environment.

Financial globalization and institutions in Africa: the case of foreign direct investment, central bank independence and political institutions

2020 ◽  
Vol 16 (6) ◽  
pp. 931-953
Author(s):  
Abel Mawuko Agoba ◽  
Elikplimi Agbloyor ◽  
Afua Agyapomaa Gyeke-Dako ◽  
Mac-Clara Acquah
Keyword(s):  
Foreign Direct Investment ◽  
Central Bank ◽  
Political Institutions ◽  
Direct Investment ◽  
Central Bank Independence ◽  
Financial Globalization ◽  
Turnover Rates ◽  
Fdi Inflows ◽  
Central Bank Governor ◽  
The Impact

AbstractIn this paper, we examine the bi-directional relationship between financial globalization (proxied by foreign direct investment (FDI) flows) and economic institutions (proxied by central bank independence (CBI)) taking into consideration the role of political institutions. We test our argument on a sample of 48 African countries (1970–2012) using a two-step System Generalized Methods of Moments, with collapsed instruments and Windmeijer robust standard errors. Using two proxies for CBI, the study finds that while legal CBI does not have a significant impact on FDI, high central bank governor turnover rates have a significantly negative impact on FDI inflows. However, higher levels of political institutions significantly enhance the impact of legal CBI on FDI inflows, and dampen the impact of high central bank governor turnover rates on FDI inflows. The study also shows that, higher FDI inflows have a significantly positive impact on both legal and de facto CBI. This impact is accelerated in countries characterized by higher levels of political institutions.

scholarly journals The Causal Link between FDI and Remittances in Kosovo, Switzerland, and Denmark

2021 ◽  
Vol 24 (2) ◽  
pp. 45-68
Author(s):  
Kida Nakije
Keyword(s):  
Foreign Direct Investment ◽  
Granger Causality ◽  
Direct Investment ◽  
Secondary Data ◽  
Wald Test ◽  
Ordinary Least Squares ◽  
Business Environment ◽  
Causal Link ◽  
Population Number ◽  
Fdi Inflows

The pursuit of money and capital is a relentless endeavor of every economy. FDI is considered the engine of economic growth, while are remittances the increasingly the catalyst of the population’s welfare. The purpose of the study is to analyze the answer about the relationship between remittances and FDI inflows in Kosovo, Switzerland and Denmark. Secondary data obtained from the World Development Indicators were, analyzed with the Ordinary Least Squares model and Granger Causality and processed with SPSS 21 technique. Measuring the correlation between variables, Foreign Direct Investment, GDP per capita growth, net migration, remittances, Gross Fixed Capital Formation, household consumption, and population number, give reliable results. Using remittances as a dependent variable, the first hypothesis has been partially confirmed, the most statistically significant and positive determinants that increase remittances are population, unemployment and migration and not other determinants. The regression results are unsatisfactory for the second hypothesis dependent variables Foreign Direct Investment the determinants are positive but not statistically significant, confirming that there are other factors that impact the increase of FDI inflows. The correlation matrix shows a high correlation between the variables. The Granger Causality model, through the Wald test, represents the cause. FDI does not cause remittances, but remittances cause FDI. A limitation of the study is the heterogeneity of the data and the countries in the sample. The results of the study will be of interest to government institutions in Kosovo to improve the business environment so that the country will become attractive to foreign investors who will bring capital and employment growth.

scholarly journals Determinants of fdi inflows in india

2016 ◽  
Vol 6 (2) ◽  
pp. 186-198
Author(s):  
Siraj-ul-Hassan Reshi
Keyword(s):  
Foreign Direct Investment ◽  
Exchange Rate ◽  
Direct Investment ◽  
Domestic Investment ◽  
Host Countries ◽  
Fdi Inflows ◽  
Explanatory Variables ◽  
The Impact ◽  
Fdi Determinants ◽  
The Relationship

Foreign direct investment (FDI) is often seen as an important catalyst for economicgrowth in the developing countries. It affects the economic growth by stimulating domestic investment, increasing human capital formation and by facilitating the technology transfer in the host countries. The main purpose of this paper is to investigate the impact of FDI determinants on FDI inflows in India from the period 1991-2009.The relationship between FDI inflow and its determinants have been analyzed by using the regression analysis and other variables that affect FDI inflows in India such as Developmental expenditure ratio, fiscal deficit ratio, exchange rate and other economic determinant such as GDP as the possible explanatory variables of foreign direct investment inflows in India. The expected results of the study are positive and statistically significant. Regarding the impact of various determinants on FDI in flows empirically, it has beenfound that all the variables except exchange rate have positively and significantly affecting FDI inflows i.e. increase in GDP, Developmental expenditure, foreign exchange reserves, increased the FDI inflows.

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