The Effect of Financial Development on Foreign Direct Investment

The relationship between financial development indexes and foreign direct investment is studied in this paper. The main objective is to examine the effects of financial development indicators in two groups (the financial markets index and the financial institution index) on the FDI absorption rate. The effects of these indicators have been evaluated in the form of a panel data model for ۱۱ countries including (Saudi Arabia, Argentina, Sweden, Poland, Belgium, Iran, Thailand, Nigeria,  Austria,  Norway, and  Venezuela) in the period ۱۹۹۰ to ۲۰۱۴. The results show that when the financial institutional index including (FID, FIE), financial market index including (FMD), GDP & DCP increase the FDI increases, and when FIA, FMA & FME increase, the FDI decreases. So Expanding the capital market will increase FDI attraction in selected countries, and for countries with weak capital markets, the financial market access index and the financial institution efficiency index has a significant negative effect on FDI absorption and vice versa.

کلیدواژه ها:

Financial Market Index ، Financial Institution Index ، Foreign direct investment ، Panel data