STOCK MARKET AND FOREIGN DIRECT INVESTMENT IN ZIMBABWE

Risk Governance & Control: Financial Markets & Institutions

Kunofiwa Tsaurai¹ 

关键词: Zimbabwe;    Stock Market Development;    Foreign Direct Investment;    Co-Integration Testing Approach;   

DOI  :  10.22495/rgcv4i2art4

学科分类：社会科学、人文和艺术（综合）

来源: Virtus Interpress

【 摘 要 】

This study investigates the causality relationship between stock market and foreign direct investment. The subject has been contentious in recent years with three theoretical rationales emerging. The first being that FDI net inflows boost stock market by increasing the amount of funds into the host country’ economy. The second suggests that FDI inflows forces the host country government to embrace market friendly policies, regulations and controls that end up boosting stock market. The third theoretical rationale mentions that well-developed and functioning stock markets attracts FDI as multinational firms perceive such a market as a friendly environment whose government is more open to the international community. Using the bi-variate causality test framework, this study discovered that there exists a long run relationship between stock market and FDI net inflows in Zimbabwe. However, the direct causality relationship from either stock market to FDI or from FDI to stock market development could not be found. This implies that stock market development and FDI net inflows in Zimbabwe are indirectly related to each other via some factors whose investigation should be a subject of another research.

【 授权许可】

CC BY-NC