Impact of COVID-19 and lockdown stringency on foreign institutional investment in India: evidence from wavelet coherence and spectral causality approaches

Aamir Aijaz Syed (), Assad Ullah and Muhammad Abdul Kamal ()
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Aamir Aijaz Syed: Shri Ramswaroop Memorial University
Muhammad Abdul Kamal: Abdul Wali Khan University

Quality & Quantity: International Journal of Methodology, 2024, vol. 58, issue 3, No 20, 2433-2452

Abstract: Abstract Foreign institutional investment has played a significant role in India’s recent economic progress. During the 2008 global financial crisis, the influence of foreign institutional investment on India’s economic growth was uneven. With this context in mind, the objective of this study is to analyze the influence of COVID-19, COVID-19 vaccines administered and lockdown stringency on the inflow and outflow of foreign institutional investment in India, using the daily data from January 30, 2020 to January 24, 2022. To achieve the objective of the present study, we have employed the wavelet coherence approach, and Breitung–Candelon spectral granger causality approaches. The outcomes of the wavelet coherence approach show that foreign institutional investment has responded negatively to both the COVID-19 outbreak and the lockdown stringency. Interesting, the response of foreign institutional investment was observed to be hostile towards COVID-19 vaccines; which underscores wait and see strategy of investors during the sample period. The frequency-domain causality approach affirms the lead–lag relationship between COVID-19, COVID-19 vaccines administered, lockdown stringency, and foreign institutional investment. We conclude that COVID-19 and lockdown are predictive factors for future foreign institutional investment at different frequencies. The study is an original work and offers useful policy recommendations.

Keywords: COVID-19; Foreign institutional investment; Lockdown stringency; Wavelet coherence approach; India (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s11135-023-01754-0

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