Please use this identifier to cite or link to this item:
Title: Foreign portfolio investments, exchange rates and capital openness : a panel data approach
Authors: Lindelwa Makoni, Patricia
Keywords: Investments, Foreign (International law)
Investments, Foreign -- Law and legislation
International finance
Foreign exchange market
Investments, Foreign
International trade
Financial crises
Issue Date: 2020
Publisher: Eleftherios Thalassinos
Citation: Lindelwa Makoni, P. (2020). Foreign portfolio investments, exchange rates and capital openness : a panel data approach. International Journal of Economics and Business Administration, 8(2), 100-113.
Abstract: Purpose: The aim of this paper is to examine the effect of real exchange rate and capital openness on foreign portfolio investments, using a panel of nine African countries, after the global financial crisis in the period 2009 -2016. Design/Methodology/Approach: We adopted a panel data approach, and more specifically data was analysed using the Fixed Effects model. The economic data was sourced from the World Bank database of development indicators, while we used Chinn and Ito’s database for capital openness. Findings: Building on from the international finance and portfolio behaviour theories, the results show that real exchange rates, capital openness and the rate of inflation have a negative relationship with FPI inflows. On the contrary, the lag of FPI, institutional quality, real economic growth rate and stock market development attract inward FPI, as portrayed in the positive relationship between the dependent and independent variables. Practical Implications: In accordance with these findings, we find that, host countries’ governments that adopted fiscal and monetary policies can ensure macroeconomic stability, and a prudently managed exchange rate through incentivising exports and discouraging imports into the host country, to attract inward FPI flows. Originality/Value: The study confirms the theoretical and empirical underpinnings that there is a negative relationship between foreign portfolio investment, and real exchange rates and capital openness, respectively in most developing countries, and African economies are no different.
ISSN: 22414754
Appears in Collections:IJEBA, Volume 8, Issue 2

Files in This Item:
File Description SizeFormat 
Foreign Portfolio Investments, Exchange Rates and Capital Openness_ A Panel Data Approach.pdf258.42 kBAdobe PDFView/Open

Items in OAR@UM are protected by copyright, with all rights reserved, unless otherwise indicated.