The relationship between foreign direct investment and financial inclusion in MENA countries: Evidence from the General Method of Moments

  • 358 Views
  • 116 Downloads

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License

The study delves into the nuanced interaction between foreign direct investment (FDI) and financial inclusion in the MENA region, spanning the years 2003 to 2022 and employing the General Method of Moments for rigorous analysis. Its primary objectives are to elucidate how financial inclusion influences FDI and to examine the mediating role of economic growth and inflation as key factors. Key findings reveal a robust positive correlation between financial inclusion and FDI inflows within MENA countries. Specifically, the study uncovers significant relationships between FDI and the various dimensions of financial inclusion, including access, availability, and usage. This underscores the pivotal role of inclusive financial systems in attracting foreign investment. Moreover, the study highlights the symbiotic relationship between economic growth and FDI, indicating that heightened levels of economic prosperity attract greater investment. This underscores the importance of fostering conducive economic conditions to attract foreign capital. Furthermore, the study underscores the critical role of financial inclusion in shaping monetary policy and mitigating investment risks. By facilitating access to capital and reducing uncertainty, financial inclusion promotes transparency and stability, thereby enhancing the attractiveness of foreign markets for investment.

view full abstract hide full abstract
    • Table 1. Descriptive results
    • Table 2. Results of stationarity
    • Table 3. Regression (GMM) results
    • Conceptualization
      Raed Walid Al-Smadi, Arkan Walid Al-Smadi
    • Data curation
      Raed Walid Al-Smadi, Arkan Walid Al-Smadi
    • Formal Analysis
      Raed Walid Al-Smadi, Arkan Walid Al-Smadi
    • Funding acquisition
      Raed Walid Al-Smadi, Arkan Walid Al-Smadi
    • Methodology
      Raed Walid Al-Smadi
    • Supervision
      Raed Walid Al-Smadi
    • Writing – original draft
      Raed Walid Al-Smadi
    • Investigation
      Arkan Walid Al-Smadi
    • Software
      Arkan Walid Al-Smadi
    • Writing – review & editing
      Arkan Walid Al-Smadi
Related Articles

  • Exploring the environmental Kuznets curve for CO2 and SO2 for Southeast Asia in the 21st century context

    Patrick Wijaya Tjoek , Pei-Ing WuORCID doi: http://dx.doi.org/10.21511/ee.09(1).2018.01
    Environmental Economics Volume 9, 2018         Issue #1         pp. 7-21 Views: 2604 Downloads: 413 TO CITE АНОТАЦІЯ

    This study aims to investigate the relationships between economic development and environmental degradation regarding the emissions of CO2 and SO2 in Southeast Asia (SEA). The pooling data consist of 10 countries, Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Singapore, the Philippines, Thailand, and Vietnam, in the period 2003-2012. Furthermore, income elasticity of CO2 and SO2 emissions is computed for each country to observe the sensitivity of environmental degradation through the emissions of CO2 and SO2 brought by economic development.
    The results indicate that CO2 displays an inverted U-shape pattern, whereas SO2 has decreased at an increasing rate since 2003. It is expected that SO2 will increase as the SEA economies further develop. The turning points for both CO2 and SO2, indicate that the current SEA income level has not reached the turning point. The income elasticities show that income elasticities for CO2 are positive for all 10 countries. Both Singapore and Malaysia are classified as countries with high income. However, Singapore, with 0.64%, has the highest income elasticity, and Malaysia, with 0.15%, has the second lowest. There is no indication that wealthy countries have a significant impact on CO2 through economic development. Income elasticities for SO2 of each country are all negative. This suggests that SO2 is an inferior good. Brunei, with 8.41%, has the most sensitivity toward change in SO2 emissions, whereas Myanmar, with only 0.58%, is the least sensitive to SO2 emissions.

  • The impact of Working Capital Management on shareholders’ wealth and profitability: evidence from Colombo Stock Exchange

    Wasantha PereraORCID , Pradeep Priyashantha doi: http://dx.doi.org/10.21511/imfi.15(2).2018.10
    Investment Management and Financial Innovations Volume 15, 2018         Issue #2         pp. 104-115 Views: 2288 Downloads: 473 TO CITE АНОТАЦІЯ

    The Working Capital Management (WCM) has an important role for the firm’s success or failure, because it directly affects the overall business health of the firm. This study examined the impact of WCM on profitability and shareholders’ wealth using 50 companies listed in different sectors on the Colombo Stock Exchange (CSE) for the period from 2010 to 2015. This sample represents 47% of the selected sectors of CSE. The profitability of the company is measured using gross operating profit (GOP) and shareholders wealth measured by Tobin’s Q (TQ) ratio. The WCM is measured using five independent variables namely stock holding period (SHP), debtors’ collection period (DCP), creditors’ settlement period (CSP), cash conversion circle (CCC) and current assets ratio (CAR). Further, three additional variables such as firm size (SIZE), leverage (LEV) and earning yield (EY) are employed as controlling variables to capture the impact of other performance of the companies.
    The data were analyzed using ordinary least square (OLS) and panel data regression models. These regression models reveal that there is a significant negative relationship between CCC and dependent variables (GOP & TQ). Further, this relationship has been confirmed by the major components of CCC such as SHP, DCP. Firm size also positively and significantly effects on the firm GOP while negatively effects on the TQ. Further, they revealed that there is a significant positive relationship between LEV and TQ. The study finds that the shareholders’ wealth and profitability can be increased through the efficiency of WCM.

  • The nexus between foreign direct investment and environmental sustainability in North Africa

    Marwa Lazreg , Ezzeddine Zouari doi: http://dx.doi.org/10.21511/ee.09(1).2018.05
    Environmental Economics Volume 9, 2018         Issue #1         pp. 57-68 Views: 2266 Downloads: 456 TO CITE АНОТАЦІЯ

    This paper provides a study of the relationship between sustainable development and foreign direct investment (FDI) from an empirical point of view in the case of the North African countries during the period from 1985 to 2005. We use the cointegration test, the FMOLS (Fully Modified Ordinary Least Squares) model and the Granger causality test to examine this relationship. According to the empirical results, we confirm the existence of a cointegration relationship between the different series studied in this paper. Based on the cointegration test we can use the error correction model. Also, to test the effect of FDI on sustainable development in the North African countries, we make an estimate by FMOLS method. We found that the foreign direct investment has a positive impact on CO2 emissions. Also, the Granger Causality test confirms the presence of a bidirectional relationship between FDI and CO2 emissions (Carbon dioxide). That is to say, the FDI can cause CO2 emissions and CO2 emissions can cause FDI based on the Granger causality.

Download Preview
Close
Investment Management and Financial Innovations
Investment Management and Financial Innovations