Exchange rate uncertainty and foreign direct investment in Africa: Does financial development matter?

Asamoah, Michael Effah; Alagidede, Paul; Adu, Frank

doi:10.1111/rode.12858

Cited by 9 publications

(5 citation statements)

References 59 publications

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“…The results of this study are in line with several studies that explain that if the exchange rate decreases, eating will attract investors to invest their capital because it will increase stock returns (Asamoah et al, 2022). Research conducted Aprilia & Malia (2022) that exchange rate uncertainty can hinder foreign direct investment inflows.…”

Section: Resultssupporting

confidence: 85%

“…There are several gaps in the results of research conducted by previous researchers such as Asamoah et al (2022) and Ramirez (2018) who argues that the market has a negative effect on FDI, which in this case will certainly affect the balance of payments in a country. In contrast to the results of research conducted by Moraghen et al (2020) shows that the market will have a negative effect in the long term on the balance of payments and not for the short term.…”

Section: Figure 1 Economic Growth Of Asean Countries In 2022mentioning

confidence: 92%

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Market volatility on the balance of payments in ASEAN countries

Andini

2024

Optim. J. Ekon. dan Pembang.

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This research aims to determine the effect of volatility on the stock market proxied by stock indices and financial markets proxied by exchange rates on the balance of payments proxied by direct investment (FDI) in ASEAN member countries for the period 2013 to 2022. The balance of payments is a systematic record of economic transactions involving one country with another country in a certain period of time, therefore the balance of payments can be influenced by various components, one of which is the market. This research is important because the results of previous research are inconsistent and over time many economic phenomena occur that will affect a country's balance of payments. The novelty of this study lies in its particular focus on the effect of market turmoil on the balance of payments in ASEAN countries. This study used quantitative methods using secondary data. This research uses panel data analysis techniques with a Fixed Effect Model (FEM) approach. The results of this study show that partially the stock index has a significant positive effect and the exchange rate has a significant negative effect on the balance of payments. This research can provide important insights for business decision makers, governments, and international institutions to understand and respond to rapid economic developments in ASEAN.

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Section: Resultssupporting

confidence: 85%

Section: Figure 1 Economic Growth Of Asean Countries In 2022mentioning

confidence: 92%

Market volatility on the balance of payments in ASEAN countries

Andini

2024

Optim. J. Ekon. dan Pembang.

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“…He included four control variables in each model that might influence FDI. Asamoah, Alagidede, and Adu (2022) developed six regression models to study the association between FDI and exchange rate uncertainty, and also asked whether financial development matters in such an association. Each of the six models uses a different financial development indicator, and all the models use four additional control variables.…”

Section: Foreign Investment Risk Indicatorsmentioning

confidence: 99%

A Foreign Investment Destination Risk Framework: Evaluating the Southern African Development Community Member States

Oberholzer,

Buys

2023

Folia Oeconomica

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Potential investment risks need to be understood by an investor organisation, which implies that a host country’s environment plays a significant role in attracting foreign investment. This paper’s purpose was to propose a foreign investment risk conceptual framework to serve as a basis for evaluating the Southern African Development Community (SADC) Member States’ investment risk/attractiveness. Firstly, the most appropriate foreign investment risk indicators from the literature were identified to develop a foreign investment risk framework. Ten recent peer reviewed studies were used to identify the factors which drive investment risk in emerging markets. We developed a conceptual framework including 16 investment risk indicators grouped into four sections: (i) the business environment, (ii) related taxes on business operations, (iii) the economic environment, and (iv) the human and social environments. Secondly, a comparative analysis of the 16 SADC countries was performed, enabling the ranking of the countries in quadrants of investment risk/attractiveness. Data were downloaded from theGlobalEconomy.com (2022) website for six years, from 2015 to 2020. The literature suggests many investment risk indicators which are grouped differently by researchers to form a conceptual framework to evaluate investment risk. This study’s contribution is that the most popular/prevalent risk indicators were identified to develop the new proposed framework. Furthermore, evaluating the SADC region may also serve as an example of investment risk/attractiveness assessment of emerging markets or least developed countries. The practical implication of this paper is that the proposed framework enables transferability since potential investors may connect the fundamentals of this study with their own investigation.

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“…The financial system plays a crucial role in facilitating risk hedging and risk diversification [17]. Thanks to advanced financial instruments in the developed financial markets, firms can easily access funds and borrow money at lower cost [18]. [19] indicates that financial development is positively associated with trade flows.…”

Section: Population Of Importer the Population Ofmentioning

confidence: 99%

Determinants of Vietnam’s Agricultual Exports, Focusing on Its Trading Partners’ Characteristics

Nguyễn Thị Thu Hương

2023

HVUJST

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This study investigates the determinants of Vietnam’s agricultural exports, focusing on its trading partners’ characteristics. The author adopts Poisson Pseudo-Maximum Likelihood estimators to estimate a gravity model covering bilateral agricultural exports from Vietnam to 187 of its trading partners during 1996-2021. The empirical results reveal that exchange rate volatility and geographical distance hamper exports, while regional trade agreements (RTAs), shared borders, and dependent relationships in the past boost exports. When considering the features of importing countries, I find that population, GDP per capita, policy stability, and financial development are crucial in promoting Vietnam's agricultural exports. The findings of this study imply that it is necessary to maintain stable exchange rates and actively join RTAs to increase the agricultural exports of Vietnam. Moreover, to enhance agricultural exports, exporting firms should target trading partners in countries with large economic size, high per capita income, good governance quality, developed financial markets, or those who share a common border or have ever in dependent relationship with Vietnam.

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Exchange rate uncertainty and foreign direct investment in Africa: Does financial development matter?

Cited by 9 publications

References 59 publications

Market volatility on the balance of payments in ASEAN countries

Market volatility on the balance of payments in ASEAN countries

A Foreign Investment Destination Risk Framework: Evaluating the Southern African Development Community Member States

Determinants of Vietnam’s Agricultual Exports, Focusing on Its Trading Partners’ Characteristics

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