THE EFFECT OF FOREIGN DIRECT INVESTMENT AND FOREIGN PORTFOLIO INVESTMENT ON STOCK MARKET RETURN IN SAARC COUNTRIES

Authors

  • Mirwais Khan MS Abasyn University, Peshawar, Pakistan
  • Shahid Rasheed PhD scholar Abasyn University, Peshawar, Pakistan
  • Hameed Ullah MS Abasyn University, Peshawar, Pakistan
  • Hayat Ullah Lecturer Jahan Institute of Higher Education, Kabul, Afghanistan
  • KaleemUllah Jan PhD scholar Abasyn University, Peshawar, Pakistan
  • Saddam Alam PhD scholar Abasyn University, Peshawar, Pakistan
  • Umer Qazi Assistant Professor Abasyn University, Peshawar, Pakistan
  • Mahboobullah Assistant Professor Abasyn University, Peshawar, Pakistan

Keywords:

Foreign direct investment, Foreign portfolio investment, Stock market returns, SAARC

Abstract

The purpose of this study is to examine the influence of foreign direct investment (FDI) and foreign portfolio investment (FPI) on stock market returns (SMR) in SAARC member nations between 2014 and 2019. The World Development Indicators (WDI) and the global economy provided secondary data for this study. Numerous punitive procedures, like the Shapiro-Wilk wtest for determining data normality and the Breusch-pagan test for determining heteroscedasticity, were utilised for robust data analysis. The findings reveal that all FDI and FPI had a low correlation with stock market returns; additionally, the low correlation indicates that the variables included in the current analysis did not exhibit multicollinearity. Diagnostic tests, including the Hausman test, revealed that the author should use the random effect model to analyse the data. The coefficient of FDI was shown to be negatively significant, meaning that increasing FDI reduces stock market returns. Growth in FPI, on the other hand, increased stock market returns. Additionally, the results suggested that the model as a whole is well-fitting.

Downloads

Download data is not yet available.

References

Abala, D. O. (2014). Foreign Direct Investment And Economic Growth : An Empirical Analysis Of Kenyan Data. 4(1), 62-83.

Alfaro, L., Chanda, A., Kalemli-Ozcan, S., & Sayek, S. (2010). Does foreign direct investment promote growth? Exploring the role of financial markets on linkages. Journal of Development Economics, 91(2), 242-256. https://doi.Org/10.1016/j.jdeveco.2009.09.004

Ali, Sajjad. (2014). Foreign Financial Inflows and Stock Market of the Host Country : Empirical Evidence from Pakistan. 12(2), 77-90.

Ali, Syed, Syed, R., & Jawaid, T. (2012). Foreign capital inflows , economic growth and stock market capitalization in Asian countries : an ARDL bound testing approach.

https://doi.org/10.1007/sl1135-012-9774-4

ANAYOCHUKWU, D. O. B. (2012). The Impact of Stock Market Returns on Foreign Portfolio Investment in Nigeria. lOSR Journal of Business and Management, 2(4), 10-19.https://doi.org/10.9790/487x-0241019

Ang, J. B. (2009). Foreign direct investment and its impact on the Thai economy: The role of financial development. Journal of Economics and Finance, 33(3), 316-323.

Downloads

Published

2022-12-31

How to Cite

Khan, M. ., Rasheed, S. ., Ullah, H. ., Ullah, H. ., Ullah Jan, K., Alam, S., Qazi, U. ., & Mahboobullah. (2022). THE EFFECT OF FOREIGN DIRECT INVESTMENT AND FOREIGN PORTFOLIO INVESTMENT ON STOCK MARKET RETURN IN SAARC COUNTRIES. The Journal of Contemporary Issues in Business and Government, 28(4), 691–702. Retrieved from https://cibgp.com/au/index.php/1323-6903/article/view/2511

Issue

Vol. 28 No. 4 (2022): The journal of contemporary issues in business and government

Section

Articles

License

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

You are free to:

  1. Share — copy and redistribute the material in any medium or format for any purpose, even commercially.
  2. Adapt — remix, transform, and build upon the material for any purpose, even commercially.
  3. The licensor cannot revoke these freedoms as long as you follow the license terms.

Under the following terms:

  1. Attribution — You must give appropriate credit , provide a link to the license, and indicate if changes were made . You may do so in any reasonable manner, but not in any way that suggests the licensor endorses you or your use.
  2. No additional restrictions — You may not apply legal terms or technological measures that legally restrict others from doing anything the license permits.

Notices:

You do not have to comply with the license for elements of the material in the public domain or where your use is permitted by an applicable exception or limitation .

No warranties are given. The license may not give you all of the permissions necessary for your intended use. For example, other rights such as publicity, privacy, or moral rights may limit how you use the material.