Dynamic common correlation effects of financial development, foreign direct investment, market size and trade openness on domestic investment: an income-level prognosis

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dc.authoriddohba dinga, gildas/0000-0002-2272-972X
dc.authoridBekun, Festus Victor/0000-0003-4948-6905
dc.contributor.authorDinga, Gildas Dohba
dc.contributor.authorFonchamnyo, Dobdinga Cletus
dc.contributor.authorOngo, Nkoa Bruno Emmanuel
dc.contributor.authorBekun, Festus Victor
dc.date.accessioned2024-09-11T19:51:54Z
dc.date.available2024-09-11T19:51:54Z
dc.date.issued2023
dc.departmentİstanbul Gelişim Üniversitesien_US
dc.description.abstractPurposeThe study examined the impact of financial development, foreign direct investment, market size and trade openness on domestic investment for 119 countries divided into four panels that are low-income countries (LIC), lower middle-income countries (LMIC), upper middle-income countries (UMIC) and high-income countries (HIC) between 1995 and 2019.Design/methodology/approachThe present study bases its empirical procedure on the bases of the data mix. To this end, based on the presence of cross-sectional dependence, covariate-augmented Dickey-Fuller unit root and Westerlund cointegration second-generation tests were employed to validate the stationarity and cointegration of the variables, respectively. The novel Dynamic Common Correlation Effects estimator was employed to estimate the heterogeneous parameters while the Dumitrescu and Hurlin test was used to test for causality direction of the highlighted variables.FindingsThe empirical results show that market size and trade openness had a positive and statistically significant effect on domestic investment for all the income groups. Results also show that financial development had a positive and statically significant effect on domestic investment only for LMIC and HIC economies, while a positive and statistically insignificant effect was obtained for LIC, UMIC and the global panel. The causality results revealed a bidirectional relationship between domestic investment and the exogenous variables - financial development, foreign direct investment, market size and trade openness.Research limitations/implicationsIt is therefore, recommended that LIC and LMIC need to consider harmonising the financial system to lower credit limitations and adopt business-friendly policies. HIC and UMIC should seek more outward FDI policies and harmonise their trade policy, to reap more benefits from FDI and international trade.Originality/valueOn novelty, previous studies have been criticised for the effect on technical innovation of bank financing and institutional quality. This research tackles the deficiency using systematic institutional quality indicators and by taking other variables into account.en_US
dc.identifier.doi10.1108/JEAS-04-2022-0099
dc.identifier.issn1026-4116
dc.identifier.issn2054-6246
dc.identifier.scopus2-s2.0-85197408848en_US
dc.identifier.urihttps://doi.org/10.1108/JEAS-04-2022-0099
dc.identifier.urihttps://hdl.handle.net/11363/7854
dc.identifier.wosWOS:000986136200001en_US
dc.identifier.wosqualityQ2en_US
dc.indekslendigikaynakWeb of Scienceen_US
dc.language.isoenen_US
dc.publisherEmerald Group Publishing Ltden_US
dc.relation.ispartofJournal of Economic And Administrative Sciencesen_US
dc.relation.publicationcategoryMakale - Uluslararası Hakemli Dergi - Kurum Öğretim Elemanıen_US
dc.rightsinfo:eu-repo/semantics/closedAccessen_US
dc.snmz20240903_Gen_US
dc.subjectDomestic investmenten_US
dc.subjectFinancial developmenten_US
dc.subjectFDIen_US
dc.subjectMarket sizeen_US
dc.subjectTrade opennessen_US
dc.subjectDCCE approachen_US
dc.subjectC23en_US
dc.subjectE22en_US
dc.subjectF13en_US
dc.subjectG23en_US
dc.titleDynamic common correlation effects of financial development, foreign direct investment, market size and trade openness on domestic investment: an income-level prognosisen_US
dc.typeArticleen_US

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