Original scientific paper
THE IMPACT OF FOREIGN DIRECT INVESTMENT ON STOCK MARKET DEVELOPMENT: EVIDENCE FROM PAKISTAN
Muhammad Shahbaz
Hooi Hooi Lean
Rukhsana Kalim
Abstract
Developing countries are witnessing changes in the composition of capital flows in their economies due to the expansion and integration of the world equity market. This paper investigates the impact of foreign direct investment on the stock market development in Pakistan. The key interest revolves around the complementary or substitution role of foreign direct investment to the development of stock market. ARDL bounds testing approach to cointegration and ECM are employed for the analysis. Our results support the complementary role of foreign direct investment to the stock market development in Pakistan. Moreover, domestic savings, income and inflation are the other macroeconomic variables that affect the development of stock market in Pakistan.
Keywords
Stock market development; Foreign Direct Investment; Pakistan; Complementary; Cointegration
Hrčak ID:
104007
URI
Publication date:
1.3.2013.
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