Real Exchange Rate Volatility and Foreign Direct Investment Inflows: The Ghanaian Experience
Journal Title: International Journal of Empirical Finance - Year 2015, Vol 4, Issue 6
Abstract
Foreign Direct Investment (FDI) has played a critical role in the economic growth and development of many countries. This critical role has motivated studies to investigate the sources or causes of FDI inflows. This study sought to investigate the influence of real exchange rate volatility on FDI inflows in the Ghanaian economy. The study used a simultaneous equation framework considering the endogeneity of some explanatory variables. The Two-stage Least Squares estimation technique was employed for the study. For Robustness, single equation models using Ordinary Least Squares were also estimated for a comparison. The main contribution of this study is empirical; the use of a simultaneous system to investigate the determinants of foreign direct investment inflows and real exchange rate volatility. The findings revealed that the responsiveness of FDI to real exchange rate volatility is inelastic, negative and not statistically significant. However, controlling for other variables, the coefficient of general price level is negative, elastic and statistically significant at the 5% significance level. It is thus recommended that other factors other than exchange rate volatility should be considered to stimulate FDI inflows in Ghana.
Authors and Affiliations
Osei-Fosu, Baba Insah Anthony, Ofori-Boateng Kenneth
Keywords
Related Articles
- EP ID EP27210
- DOI -
- Views 342
- Downloads 12
An Empirical Investigation into Determinants of Shareholders Value Creation among Banks in Nigeria
This paper empirically investigates the determinants of shareholder value creation among quoted banks in Nigeria. Some Banks in Nigeria were growing big in value and size and also attracting investors but were suddenly...
Liquidity-Profitability Relationship in Bangladesh Banking Industry
This study explored the relationship between liquidity (measured as current ratio) and profitability (measured as return on assets) in the banking industry in Bangladesh. We have considered twelve banks in four differen...
Appraising the Credit Policy in the Private Sector Investment in the Nigerian Economy
The objectives of this study is appraising of credit policy in the private sector investment in Nigeria economic growth. Findings reveal the significant and positive impacts of domestic credit to private sector propert...
Influence Policy and Fitness State Electricity Company (PLN) Investment Business Generation
The purpose of writing this article is to describe the effect of the acquisition of financial imbalance between the IPP and PLN benefits and there are opportunities opportunity income or cost savings that have accrued...
An Investigation How Quantitative Easing Programme, Vickers’ Ring-Fencing Regulation and the ‘Brexit’ Announcement Impact on UK Banking Sector
In this paper, ‘Events study analysis’ is used to analyse the impact of Vickers’ Ring-fencing regulation, Quantitative Easing programme and the United Kingdom’s vote to leave the European Union (‘Brexit’) on the UK ban...