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Types of foreign capital inflows and economic growth: new evidence on role of financial markets


Citation

Baharumshah, Ahmad Zubaidi and Mohd Ali, Ly Slesman @ Sulaiman and Paul Devadason, Evelyn Shyamala (2017) Types of foreign capital inflows and economic growth: new evidence on role of financial markets. Journal of International Development, 29 (6). pp. 768-789. ISSN 0954-1748; ESSN: 1099-1328

Abstract

This paper presents evidences on differential growth effects for three types of foreign capital inflows (foreign direct investment, portfolio equity and debt inflows). Two major results emerged from the application of threshold regression. First, we find strong evidence that the relationship between private foreign capital inflows and growth is characterised by a nonlinear relationship based on financial development. Second, the positive benefits of the three types of capital inflows are only found in countries having a level of financial market development beyond a threshold level. A deeper and more active financial sector is crucial for economic progress.


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Additional Metadata

Item Type: Article
Divisions: Faculty of Economics and Management
DOI Number: https://doi.org/10.1002/jid.3093
Publisher: John Wiley & Sons
Keywords: Capital inflows; Economic growth; Financial development; Threshold effects
Depositing User: Ms. Nida Hidayati Ghazali
Date Deposited: 31 Jan 2018 14:58
Last Modified: 29 Mar 2018 06:13
Altmetrics: http://www.altmetric.com/details.php?domain=psasir.upm.edu.my&doi=10.1002/jid.3093
URI: http://psasir.upm.edu.my/id/eprint/46782
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