Author

  • Ali Raza

    • Hailey College of Commerce, PU Lahore, Pakistan
    • Pakistan

  • Nasir Iqbal

    • Hailey College of Commerce, PU Lahore, Pakistan
    • Pakistan

  • Zeshan Ahmed

    • Hailey College of Commerce, PU Lahore, Pakistan
    • Pakistan

  • Mohammad Ahmed

    • Hailey College of Commerce, PU Lahore, Pakistan
    • Pakistan

  • Tanvir Ahmed

    • Hailey College of Commerce, PU Lahore, Pakistan
    • Pakistan

Abstract

The purpose of this study is to empirically analyze the role of foreign direct investment in developing host country’s stock markets and to examine whether they are related or not. The key interest turns around the admiring role of FDI in Stock market development of Pakistan. Our work also aims to investigate the effect of foreign direct investment along with domestic savings, exchange rate and inflation in developing Pakistan stock markets in a rapidly changing political environment. This study applies Ordinary Least Square (OLS) method of regression by using annual time series data for the period 1988-2009 in case of Pakistan to estimate empirical relationships among variables. The results disclose a positive impact of foreign direct investment along with other explanatory variables in developing Stock markets of Pakistan. The study findings can be used to help government policy makers to encourage FDI and take various steps to provide incentives and save foreign investors interest in a volatile political environment that prevailing in the country. Adequate facility of infrastructure can enhance FDI. The volatility of exchange rate and inflation rate should also be minimized through monitory policy while domestic savings must also be encouraged in the country through appropriate and encouraging saving policies. Our effort exclusively study development of Stock markets in Pakistan with special reference to foreign direct investment and other variables. Our study depicts a closer relationship between FDI and Stock Market Development.

Keywords

References

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How to Cite

Raza, A., Iqbal, N., Ahmed, Z., Ahmed, M., & Ahmed, T. (2012). The Role of FDI on Stock Market Development: The Case of Pakistan. Journal of Economics and Behavioral Studies, 4(1), 26-33. https://doi.org/10.22610/jebs.v4i1.299

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Copyright (c) 2012 Ali Raza, Nasir Iqbal, Zeshan Ahmed, Mohammad Ahmed, Tanvir Ahmed (Author)

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Research Paper

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Vol. 4 No. 1 (2012) Disclosure, Markets & Corporate Finance View issue contents

Published

2012-01-15

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