Foreign Direct Investment and Local Financial Market Development: A Granger Causality Test Using Panel Data

Mahmoud, Ashraf Abdelaal

doi:10.2139/ssrn.1667138

Cited by 3 publications

(3 citation statements)

References 17 publications

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“…Investors seek to maintain track on the financial and economic environment in which the bank operates as well as the operational activities of the banks, and assess the impact of financial performance indicators in terms of profitability, liquidity, operations, and other factors. Furthermore, the collecting, analyzing, assessing, and reviewing the financial statements enables the investors to evaluate banks' financial performance to make the right decision based on the bank's conditions (Mahmoud, 2010). The research's dependent variable is banks' performance.…”

Section: The Variables 421 Bank Performancementioning

confidence: 99%

Liquidity Risk and Bank Financial Performance

Mahdy

2023

التجارة والتمويل

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In recent decades, businesses and academics in the field of financial management have developed an increasing interest in banks' liquidity. It has been recognized that banks' liquidity may impact banks' financial performance. Contemporary research shows that optimal liquidity reserves could enhance banks' financial performance across several countries. Though, the question of "how liquidity dynamics impact banks' financial performance" has not been thoroughly conducted and studied in Egypt. This research intends to investigate the impact of liquidity risk on Egyptian banks' performance. This research also examines how nonperforming loans and liquidity risk interact to affect the performance of Egyptian banks. The empirical data is drawn from a sample of 396 observations for the period 2013-2021 for Egyptian banks listed on the Egyptian Stock Exchange. Mixed-effects models were used as the statistical tools to analyze the collected data. The return on asset, return on equity, and banks' stock price are used as measures of banks' performance. According to the empirical findings, there is a significant inverse impact of liquidity risk on bank financial performance as measured by ROA. Furthermore, there is a negative and significant association between nonperforming loans and bank performance as indicated by ROE. Moreover, for the stock price model, it is concluded that the interaction effect of liquidity risk and nonperforming loans on bank performance is significantly negative. This demonstrates how procedures for managing liquidity risk are crucial in establishing banks' profitability and preventing banks' failure. Consequently, banks must practice prudent risk management strategies to protect the interests of investors.

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Section: The Variables 421 Bank Performancementioning

confidence: 99%

Liquidity Risk and Bank Financial Performance

Mahdy

2023

التجارة والتمويل

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“…an efficient stock market are important determinants to attract more FDIs as deducted by Nasser and Gomez (2009). Mahmoud (2010) also added that financial development can attract more FDIs inflows through its impact on liquidity, efficient resource allocation and transaction cost reduction. Additionally, FDI causes alternative energy resources and alternative energy resources cause financial development and natural resources rents.…”

Section: Foreign Direct Investmentmentioning

confidence: 99%

“…As for Egypt, the issue of providing the necessary financial resources to raise investment rates and achieve the effective use of those resources across sectors is one of the fundamental issues that received great attention. So, considerable efforts are exerted by the Egyptian Government concerning the liberalization of the financial sector since 1991 (El-Antary, 2005; Ibrahiem, 2020; Mohieldin et al , 2019).…”

Section: Introductionmentioning

confidence: 99%

Financial development and natural resources nexus in Egypt: the role of clean energy sources and foreign direct investment

Ibrahiem

Sameh

2021

IJESM

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Purpose Achieving the goals of the sustainable development strategy and Egypt’s vision 2030 depends mainly on the existence of sources of funds. And since Egypt faces a great challenge in obtaining finance, then analyzing the drivers of financial development is a vital issue and there is a persistent need to shed light on the key obstacles for it. Thus, this paper aims to empirically assess the impact of natural resources, foreign direct investment (FDI) net inflows, education and clean energy sources on financial development in Egypt using the data of the 1971–2014 period. Design/methodology/approach The paper uses auto-regressive distributed lag and Toda-Yamomoto approaches to fulfill the purpose. Findings Empirical results signify that all variables except natural endowments stimulate financial development which can suggest the presence of the natural resources curse in Egypt. Moreover, the feedback effect between financial development and FDI is recognized. Clean energy sources cause financial development and natural endowments. Financial development causes natural endowments and FDI leads to the deployment of more clean energy resources. Practical implications Several crucial policy implications are suggested based upon these results as improving the quality and quantity of education and encouraging both domestic and foreign investors by providing several incentives. Moreover, the government has to enhance green finance through financing solar energy projects and other environmentally friendly projects. Originality/value It is the first research for Egypt that explores natural resource-financial development nexus using time series analysis according to our information, and two important variables are included in the model which is clean energy sources and FDI. Then, although several studies examined the impact of financial development on clean energy no empirical study before assessed the impact of clean energy on financial development.

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Does foreign direct investment cause financial sector development – evidence from an emerging economy

Amoh

Abdul-Mumuni

Fosu

2019

Review of Economic and Business Studies

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The aim of this exploratory research is to examine the foreign direct investment (FDI) – financial development (FD) nexus and to analyse the strength of relationships among FDI measures. The study employed structural equation modelling (SEM) on selected data from the World Development Indicators (WDI) from 1979 to 2016 to achieve the modest goal of this paper. The study established that FDI inflows are precursors of a vibrant and well-developed financial institution in emerging economies. We also found positive and negative correlations amongst the FDI measures, which suggest they move pari passu in stimulating the FD of an economy. A notable feature of this study is in the employment of SEM empirical strategy to shed light on the FDI-FI nexus. The study concluded that emerging economies must focus on the creation of a congenial investment climate to attract FDI inflows, which pivots robust financial institutions because of their cascading effects on the overall economy.

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Foreign Direct Investment and Local Financial Market Development: A Granger Causality Test Using Panel Data

Cited by 3 publications

References 17 publications

Liquidity Risk and Bank Financial Performance

Liquidity Risk and Bank Financial Performance

Financial development and natural resources nexus in Egypt: the role of clean energy sources and foreign direct investment

Does foreign direct investment cause financial sector development – evidence from an emerging economy

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