The effect of Systematic Risk Determinants on Domestic Investment in West African Economic Monetary Union (WAEMU)

Aka Messouma C., AKA Messou J. and Biqiong Zhang
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Aka Messouma C.: Central University of Finance and Economics, China.
AKA Messou J.: Capital University of Economics and Business, Beijing, China.
Biqiong Zhang: Central University of Economics and Finance , Beijing, China.

International Journal of Science and Business, 2021, vol. 5, issue 10, 103-110

Abstract: Using panel data for eight West African Economic Monetary Union (WEAMU) nations spanning 12 years from 2005 to 2017. We investigate the impact of systematic risk variables on domestic investment from 2005 to 2017. The empirical data reveal that the currency rate and inflation have a considerable influence on domestic investment in these WEAMU nations. The exchange rate has a positive coefficient, which implies that other factors remain constant; a one-unit increase in the exchange rate increases domestic investment in WEAMU by US$3.79 million; and inflation has a negative coefficient, which implies that other factors remain constant; a one-percentage-point increase in the inflation rate decreases domestic investment in WEAMU by 62.56 percent. Political unrest and interest rates are insignificant. This requires the governments of the individual nations to stabilize inflation and currency rates in order to reduce the systemic risks that the financial industry faces.

Keywords: Systematic risk determinants; Domestic investment; Growth; WAEMU (search for similar items in EconPapers)
Date: 2021
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