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Determinants of foreign direct investment in Africa: An analysis of the impact of financial development

Bruno Emmanuel Ongo Nkoa ()
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Bruno Emmanuel Ongo Nkoa: University of Buea

Economics Bulletin, 2018, vol. 38, issue 1, 221-233

Abstract: This paper investigates the impact of financial development on Foreign Direct Investment (FDI) in 52 African countries under the OLI Dummy's paradigm from 1995 to 2015. The sample is made up of 35 countries without financial market and 17 countries with a financial market. The empirical methodology is based on the Generalized Method of Moments (GMM). Our empirical results show that, money and quasi money, banking credit to private sector and interest rate liberalisation play a positive role on FDI in countries without financial market. Money and quasi money, market capitalisation and financial market value traded positively influence FDI in countries with financial market. The study suggests, with regard to the low level of our estimated coefficients, that African countries need to reinforce their financial reforms.

Keywords: Foreign direct investment; financial development; banking system; stock market; Africa; generalized method of moments (search for similar items in EconPapers)
JEL-codes: F2 G2 (search for similar items in EconPapers)
Date: 2018-02-09
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