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The impact of FDI on stock market development. Evidence in Asian countries

By Le Quang Phu (VNP 23)

Supervisor: Dr. Le Ho An Chau

Abstract:

Through applying panel data, this paper examines the role of FDI in developing the stock market in the Asia-Pacific (APAC) countries during the period 1990-2017. This includes an overview of the theoretical framework, in which the supplementary role of FDI on the economic growth will also have the spillover effects on the stock market. Based on the previous studies, there are also some determinants needs to be tested whether there are any effects of theirs on stock market or not. They are the income growth rate, liquidity of stock market, gross domestic saving, credit to the private sector, inflation and two financial crises in 1998 and 2007. The paper employs panel data with some econometrics techniques such as Fixed effects model, random effects model and unit root test. The research result shows that financial intermediary development has the positive effects on the stock market in the APAC countries. The key factor FDI has significant impact on the stock market development but the significant sign or not based on different groups of developing and developed countries. Generally, the results are essential to answer the question of the research as well as certify the expectation for the assumption of impact of FDI on the stock market in the APAC countries.

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