Does financial deepening attract foreign direct investment? Fresh evidence from panel threshold analysis

Liu, Haiyun; Islam, Mollah Aminul; Khan, Muhammad Asif; Hossain, Ismail; Pervaiz, Khansa

doi:10.1016/j.ribaf.2020.101198

Cited by 69 publications

(52 citation statements)

References 57 publications

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“…On the other side, Desbordes, and Wei (2017) have found evidence that financial development strongly promotes FDI inflows. This finding has been confirmed by Liu et al (2020) who have observed that financial development induces greater FDI inflows only when financial development depth exceeds a certain threshold. Akisik (2020) has tempered these outcomes by demonstrating empirically that while financial development, International Financial Reporting Standards (IFRS) and rule of law, taken individually, exerts a positive effect on FDI inflows, their interactions appear to mitigate these positive effects.…”

Section: Does the Effect Of Poverty On Fdi Inflows Depend On Other Fasupporting

confidence: 63%

Does Poverty deter Foreign Direct Investment flows to Developing Countries?

Sk¹

2020

Preprint

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The present paper investigates the effect of poverty on foreign direct investment (FDI) inflows in developing countries. It complements the important extant literature on the effect of FDI inflows on poverty by examining the issue the other way around. The analysis is conducted using a sample of 117 countries over the period 1980-2017, and the two-step system Generalized Methods of Moments (GMM) technique. It has relied on two indicators of poverty, namely poverty headcount ratio and poverty gap. Findings indicate that over the full sample, poverty influences negatively FDI inflows, including through its adverse effect on human capital (that is, both education and health). Unsurprisingly, low-income countries (considered as poorest countries in the full sample) experience a higher negative effect of poverty on FDI inflows than other countries. On another note, participation in international trade matters for the effect of poverty on FDI inflows. In fact, an increase in poverty levels results in lower FDI inflows in countries that experience low workers' productivity, a less developed financial sector, and a low level of infrastructure development. Furthermore, the effect of poverty on FDI inflows does not depend on the prevailing economic growth rate. Finally, the analysis has revealed the existence of a non-linear effect of poverty on FDI inflows for the poverty headcount indicator, but not for the poverty gap indicator. The non-linear effect of poverty headcount on FDI inflows is such that a rise in poverty headcount ratio results in lower FDI inflows, but an additional increase in poverty more than further discourages FDI inflows. The conclusion discusses the implications of these findings.

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Section: Does the Effect Of Poverty On Fdi Inflows Depend On Other Fasupporting

confidence: 63%

Does Poverty deter Foreign Direct Investment flows to Developing Countries?

Sk¹

2020

Preprint

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“… The research initially analyzes the relation between TMT gender diversity and innovation based on the overall sample (H. Liu, Islam, Khan, Hossain, & Pervaiz, 2020) and finds that this relationship is generally significant and positive. TMT gender diversity cannot only provide advantages such as reducing group think and inertia, and increasing TMT efficiency and monitoring of management, but also show disadvantages like making the bias worse.…”

Section: Conclusion and Limitationsmentioning

confidence: 99%

Threshold effect of gender composition in the top management team on firm innovation: New evidence from China

Huang

2020

Manage Decis Econ

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Whether there is an optimal threshold interval of gender structure of the top management team (hereafter TMT) was determined from the view of maximizing the innovation capacity of the firm. Drawing upon the social role and cognitive theories, the present study applies the panel threshold regression model to reconcile the mixed findings with regard to the relationship between TMT gender composition and enterprise innovation using the data from 187 listed electronic firms in China during the period of 2012–2016. The results indicate that the significant three‐threshold effect does exist with performing the “N” correlation between TMT gender diversity and innovation. The optimal threshold intervals of TMT gender structure in national, coastal, and inland enterprises are [1/4, 3/10], [1/5, 1/3], and [1/10, 1/6], respectively.

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“…A country's financial system has been regarded as a crucial factor for sustainable economic advancement (Khan, Islam, & Akbar, 2020;Liu, Islam, Khan, Md Ismail, & Pervaiz, 2020). This system creates the flows of money and keeps the system working (Mollah Aminul Islam, Khan, Popp, Sroka, & Oláh, 2020).…”

Section: Introductionmentioning

confidence: 99%

“…A pretty bunch of studies has been conducted to investigate the impact of the financial system on economic speed (for example, Ali, Rashid, & Islam, 2010;Bittencourt, 2012;Levine, 2005;Liu et al, 2020;Nyasha & Odhiambo, 2018). Although most of the researchers contended on the positivity of the finance-growth relationship, some seminal researches identified different dimensions, especially non-linearity in the relations (Rousseau & Wachtel, 2011).…”

Section: Introductionmentioning

confidence: 99%

Financial development and foreign direct investment nexus: A systematic review of literature

Islam

Hossain²,

Khan³

et al. 2021

IJRBS

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In this study, we review the literature to find how the financial development of a country attracts foreign direct investments for a sustainable real sector development of the country. The area is least focused on literature. Thus we don’t limit our search and review to any time or database or journal category. We find the theoretical logic and empirical evidence so far available in the literature. Our review finds that the development of the financial sector of a country is one of the most important attractors of FDIs. Theoretically, financial sector development works as a symbol of trust and goodness to the new potential investors and a good resource allocation channel for the existing investors. However, very few researchers find that FDIs are more prone to countries with a low developed financial system which may happen due to the presence of risk-taker foreign investors and risk-averse domestic entrepreneurs.

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Does financial deepening attract foreign direct investment? Fresh evidence from panel threshold analysis

Cited by 69 publications

References 57 publications

Does Poverty deter Foreign Direct Investment flows to Developing Countries?

Does Poverty deter Foreign Direct Investment flows to Developing Countries?

Threshold effect of gender composition in the top management team on firm innovation: New evidence from China

Financial development and foreign direct investment nexus: A systematic review of literature

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