Foreign Institutional Investment in India: Determinants and the Impact of Crises

28 Pages Posted: 4 Jul 2013

See all articles by Niti Bhasin

Niti Bhasin

University of Delhi - Department of Commerce

Vartika Khandelwal

Independent

Date Written: July 3, 2013

Abstract

This paper identifies the determinants of FII inflows to India by taking various ‘push’ and ‘pull’ factors as well as two dummy variables to account for the financial crisis of 1997 and 2008. Starting with a multiple regression framework, we then employ the principal component analysis to augment the model’s analytical richness. Our results indicate the important determinants as returns on MSCI Emerging Market Index, past values of FII inflows and Index of Industrial Production (IIP). Further, the crisis of 2008 is found to have a significant impact on net FII flows.

Keywords: Foreign Institutional Investment, Stock Market Returns, Volatility, crisis, Principal component analysis

Suggested Citation

Bhasin, Niti and Khandelwal, Vartika, Foreign Institutional Investment in India: Determinants and the Impact of Crises (July 3, 2013). Available at SSRN: https://ssrn.com/abstract=2289367 or http://dx.doi.org/10.2139/ssrn.2289367

Niti Bhasin (Contact Author)

University of Delhi - Department of Commerce ( email )

Department of Commerce, Delhi School of Economics
University of Delhi
Delhi, 110007
India

Vartika Khandelwal

Independent ( email )

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