Ali Ahmadi; Arash Khalili Nasr
Abstract
foreign investments have always been welcome and policy makers always do their best in order to attract more and more capital into their area; But a question which gave rise to a series of studies is that is FDI always beneficial for the recipient and does it under all circumstances help the growth in ...
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foreign investments have always been welcome and policy makers always do their best in order to attract more and more capital into their area; But a question which gave rise to a series of studies is that is FDI always beneficial for the recipient and does it under all circumstances help the growth in the host economy? In order to answer this question, we first examined whether or not FDI, by itself, has any significant impact on growth and the results proved that FDI affects growth positively in our full sample. We then show that FDI’s effect on growth is different in developed and non-developed countries. A surprising finding in our study is that in developed countries foreign flows of investment do not affect economic growth where this effect in non-developed countries is relatively high and significant. Three different stock market indicators (market capitalization, value traded and turnover ratio) are then introduced and it is tested whether the differences in FDI’s impact in developed and non-developed countries is due to their stock-market-related financial absorptive capacities. Our key contribution in this paper, along with our other novel findings, is that we introduce cut-off levels for these three indicators which successfully split our sample into one sub-sample in which FDI strongly affects growth and one in which FDI’s effect on growth diminishes.
Nasrin Rostami; Abbas Najafizadeh; Ahmad Sarlak; Esmaeil Safarzadeh
Abstract
The purpose of this paper is to examine the asymmetric effects of banking sector and stock market development on economic growth in Iran. For this purpose, Smooth Transition Regression (STR) model used based on seasonal time series data during 1989-2017. The results indicate that the impact of financial ...
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The purpose of this paper is to examine the asymmetric effects of banking sector and stock market development on economic growth in Iran. For this purpose, Smooth Transition Regression (STR) model used based on seasonal time series data during 1989-2017. The results indicate that the impact of financial and banking development indices on economic growth is different for economic growth rates above and below 6%. Therefore, if the economic growth rate is higher than 6%, then we have a regression and when economic growth is lower than 6% will have another regression in order to effect of financial development of economic growth. In addition, results show that that the relationship between private sector credit and economic growth is much stronger than the relationship between stock market and economic growth.