Foreign Direct Investment and Local Financial Market Development: A Granger Causality Test Using Panel Data
Ashraf Abdelaal Mahmoud
University of Rome II - Faculty of Economics; George Washington University - School of Business
August 27, 2010
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.
Number of Pages in PDF File: 13
Keywords: FDI, Financial market, Capital markets, Credit markets
JEL Classification: F21, P45, O16, G1working papers series
Date posted: August 30, 2010 ; Last revised: September 2, 2010
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