Exploring the Causality Links between Financial Markets and Foreign Direct Investment in Africa

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dc.contributor.author Agbloyor, E.K.
dc.contributor.author Abor, J.
dc.contributor.author Adjasi, C.K.D.
dc.contributor.author Yawson, A.
dc.date.accessioned 2015-07-24T16:40:47Z
dc.date.accessioned 2017-10-16T11:06:44Z
dc.date.available 2015-07-24T16:40:47Z
dc.date.available 2017-10-16T11:06:44Z
dc.date.issued 2013
dc.identifier.uri http://197.255.68.203/handle/123456789/6690
dc.description.abstract This paper sets out to explore the causality links between financial markets and foreign direct investment (FDI) in Africa. We use proxies for the banking sector and stock market to capture financial market development. We run separate estimations for the banking and stock market samples. Therefore, the sample size differs based on the sample being estimated. The banking sample is made up of 42 countries, whilst the stock market sample is made up of 16 countries. We use data covering the period 1970–2007 for the bank sample whilst for the stock market sample we use data covering the period 1990–2007. We use a 2SLS panel instrumental variable approach to obviate simultaneous causality bias. Our results suggest that a more advanced banking system can lead to more FDI flows. Also higher FDI flows can lead to the development of the domestic banking system. Countries with better-developed stock markets are likely to attract more FDI. We also find that FDI flows can lead to the development of the domestic stock market. Our results imply significant complementarities and feedback between financial markets and FDI in Africa. en_US
dc.language.iso en en_US
dc.subject Africa en_US
dc.subject Banks en_US
dc.subject Foreign direct investment en_US
dc.subject 2SLS panel instrumental variables en_US
dc.subject Stock markets en_US
dc.title Exploring the Causality Links between Financial Markets and Foreign Direct Investment in Africa en_US
dc.type Article en_US


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