دانلود رایگان مقاله عوامل اقتصاد کلان و نمونه کار خارجی نوسانات سرمایه گذاری

Abstract

Macroeconomic factors play a pivotal role in attracting foreign investment in the country. This study investigates the relationship between macroeconomic factors and foreign portfolio investment volatility in South Asian countries. The monthly data is collected for the period ranging from 2000 to 2012 for four Asian countries i.e. China, India, Pakistan and Sri Lanka because monthly data is ideal for measuring portfolio investment volatility. For measuring volatility in foreign portfolio investment, GARCH (1,1) is used because shocks are responded quickly by this model. The results reveal that there exists significant relationship between macroeconomic factors and foreign portfolio investment volatility. Thus, less volatility in international portfolio flows is associated with high interest rate, currency depreciation, foreign direct investment, lower inflation, and higher GDP growth rate of the host country. Thus findings of this study suggest that foreign portfolio investors focus on stable macroeconomic environment of country.

5. Conclusion and recommendations

Foreign portfolio investment is of volatile nature and leaves the country due to uncertainty in macroeconomic factors. Based on our findings, we conclude that all the macroeconomic factors affect foreign portfolio investment volatility except interest rate in China. In India, inflation rate, foreign direct investment, interest rate and stock index bring significant volatility in foreign portfolio investment. Except exchange rate and inflation rate, all other variables have significant effect on FPI volatility in Pakistan. While only three variables, namely, economic growth, industrial growth and stock return bring significant variation in FPI in case of Srilanka. The inflation rate in India and China attracts more foreign investment and reduces portfolio investment volatility. These findings are consistent with Agarwal (1997) and Rai and Bhanumurthy (2004); they suggest that these two countries are managing and controlling their inflation. While inflation has no effect in Pakistan and Srilanka that confirm to Bleaney and Greenaway (2001) because exchange rate is being undervalued and currency of these two countries is continually falling and foreign portfolio investment persists (Lee & Yoon, 2007). FDI brings reduction in foreign portfolio investment volatility as is happening in China, India and Pakistan; it implies that in China, India and Pakistan the financial market is in progressing. However, in case of Srilanka, FDI is not playing its part to reduce FPI volatiltiy because of liquidity issues; investors hesitate to invest in portfolio investment because of less return. High economic growth rates attract more FPI and reduce volatility in FPI because high GDP growth rate will affect index to boost up then stock return would increase as the result leading to decrease in volatility of portfolio investment. Our findings in case of China are in accordance with the results of Bekaert and Harvey (1998). The economic growth does not affect FPI volatiltiy in India and Srilanka and this matches to Thapa and Poshakwale (2010) that portfolio investors are attracted by economic development that is captured by per capita GDP of the country.