Dynamic common correlated effects of financial inclusion on foreign direct investment: Evidence from East-Asia and Pacific countries
This research explores the dynamic common correlated effects of financial inclusion on foreign direct investment (FDI) in East Asia and Pacific (EAP) countries. Traditional econometric methodologies overlook cross-sectional dependence and heterogeneity among countries, resulting in biased estimates....
| Main Authors: | , , , , |
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| Format: | Article |
| Language: | English |
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Elsevier
2023-05-01
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| Series: | Borsa Istanbul Review |
| Subjects: | |
| Online Access: | http://www.sciencedirect.com/science/article/pii/S2214845022001259 |
| _version_ | 1797818725300174848 |
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| author | Yue Sheng Chen Zhong Chen Sajid Ali Muhammad Imdad Ullah Muhammad Khalid Anser |
| author_facet | Yue Sheng Chen Zhong Chen Sajid Ali Muhammad Imdad Ullah Muhammad Khalid Anser |
| author_sort | Yue Sheng Chen |
| collection | DOAJ |
| description | This research explores the dynamic common correlated effects of financial inclusion on foreign direct investment (FDI) in East Asia and Pacific (EAP) countries. Traditional econometric methodologies overlook cross-sectional dependence and heterogeneity among countries, resulting in biased estimates. As a result, we use a unique method called DCCE, which can effectively address these problems. The short run and long-run estimates reveal that financial inclusion positively and significantly influences FDI in higher-income and overall EAP countries. Furthermore, in lower-income EAP countries, financial inclusion has an insignificant correlation with FDI, which becomes significant when an interaction term for institutional performance and financial inclusion is included. Hence, governments and policy makers in EAP economies should try to increase financial inclusion in order to attain an optimal and sustainable level of FDI inflows to enhance economic growth. |
| first_indexed | 2024-03-13T09:12:20Z |
| format | Article |
| id | doaj.art-90ebc5a9e4d14657b8386f93c5b3ad68 |
| institution | Directory Open Access Journal |
| issn | 2214-8450 |
| language | English |
| last_indexed | 2024-03-13T09:12:20Z |
| publishDate | 2023-05-01 |
| publisher | Elsevier |
| record_format | Article |
| series | Borsa Istanbul Review |
| spelling | doaj.art-90ebc5a9e4d14657b8386f93c5b3ad682023-05-27T04:25:19ZengElsevierBorsa Istanbul Review2214-84502023-05-01233541549Dynamic common correlated effects of financial inclusion on foreign direct investment: Evidence from East-Asia and Pacific countriesYue Sheng Chen0Zhong Chen1Sajid Ali2Muhammad Imdad Ullah3Muhammad Khalid Anser4School of Finance and Accounting, Fuzhou University of International Studies and Trade, Fuzhou, 350202, ChinaSchool of Business, Xiamen Institute of Technology, Xiamen, China; Corresponding author.School of Economics, Bahauddin Zakariya University, Multan, PakistanSchool of Economics, Bahauddin Zakariya University, Multan, PakistanFaculty of Business and Management Sciences, The Superior University, Lahore, Pakistan; Putra Business School, Universiti Putra, MalaysiaThis research explores the dynamic common correlated effects of financial inclusion on foreign direct investment (FDI) in East Asia and Pacific (EAP) countries. Traditional econometric methodologies overlook cross-sectional dependence and heterogeneity among countries, resulting in biased estimates. As a result, we use a unique method called DCCE, which can effectively address these problems. The short run and long-run estimates reveal that financial inclusion positively and significantly influences FDI in higher-income and overall EAP countries. Furthermore, in lower-income EAP countries, financial inclusion has an insignificant correlation with FDI, which becomes significant when an interaction term for institutional performance and financial inclusion is included. Hence, governments and policy makers in EAP economies should try to increase financial inclusion in order to attain an optimal and sustainable level of FDI inflows to enhance economic growth.http://www.sciencedirect.com/science/article/pii/S2214845022001259Cross-sectional dependenceDCCE approachEast Asia and Pacific countriesFinancial inclusion |
| spellingShingle | Yue Sheng Chen Zhong Chen Sajid Ali Muhammad Imdad Ullah Muhammad Khalid Anser Dynamic common correlated effects of financial inclusion on foreign direct investment: Evidence from East-Asia and Pacific countries Borsa Istanbul Review Cross-sectional dependence DCCE approach East Asia and Pacific countries Financial inclusion |
| title | Dynamic common correlated effects of financial inclusion on foreign direct investment: Evidence from East-Asia and Pacific countries |
| title_full | Dynamic common correlated effects of financial inclusion on foreign direct investment: Evidence from East-Asia and Pacific countries |
| title_fullStr | Dynamic common correlated effects of financial inclusion on foreign direct investment: Evidence from East-Asia and Pacific countries |
| title_full_unstemmed | Dynamic common correlated effects of financial inclusion on foreign direct investment: Evidence from East-Asia and Pacific countries |
| title_short | Dynamic common correlated effects of financial inclusion on foreign direct investment: Evidence from East-Asia and Pacific countries |
| title_sort | dynamic common correlated effects of financial inclusion on foreign direct investment evidence from east asia and pacific countries |
| topic | Cross-sectional dependence DCCE approach East Asia and Pacific countries Financial inclusion |
| url | http://www.sciencedirect.com/science/article/pii/S2214845022001259 |
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