Foreign Direct Investment, Institution Quality and Financial Development The Case of Selected Asian Countries
Author: Muhammad Iqbal

This thesis attempts to analyze the linkages between financial development, institutions and foreign direct investment (FDI) for a panel of Asian countries. This thesis also explores the conceptually channels through which financial development and institutions influence foreign direct investment inflow. For empirical analysis, we construct financial development index and institution quality index using a comprehensive methodology. The index develops through Principle Component Analysis (PCA). To quantify the linkages between financial development, institutions and FDI different estimation techniques used such as Fixed Effect Model and Systematic GMM. When we performed the Hausman test specification, the test recommended the use of fixed effects model Fixed effect model confirm that there is a significant and positive relationship between financial development and FDI. The results of fixed effect model show that there is positive relationship between institutions and FDI that support over objective. The results of GMM show that financial development and institution quality have significant and positive impact on FDI inflow. Supervisor:- Dr. Nasir Iqbal

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Supervisor: Nasir Iqbal

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