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Subject: Financial development ×

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    FDI, financial development and growth: an ARDL cointegration approach for the Philippines
    (2014-08) Dagli, Suzette B.; Daway, Sarah Lynne S.
    This study explores the long-run and short-run links among FDI, financial development and growth in the Philippines using the Autoregressive Distributed Lag (ARDL) bounds testing approach to cointegration found in Pesaran et al. (2001). The empirical results show that FDI has no significant long-run and short-run unconditional impacts on growth. Moreover, FDI is found to have both insignificant short-run and long-run effects on growth conditional on the level of financial sector development. These results are robust to some alternative specifications of the model, indicating weaknesses in the FDI and financial policies in the Philippines that call for future policy reforms.
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    Financial development and other preconditions for financial integration
    (2016-05) Cheng, Kent Jason G.; Daway, Sarah Lynne S.
    Existing financial integration studies have mostly been about how the phenomenon causes economic development, not on its drivers. Veering away from the economic-growth centric theme, this study tries to determine what causes financial integration represented by FDI inflows, portfolio equities net inflows, and the volume of foreign assets and foreign liabilities. Using dynamic generalized method-of-moments estimator on a panel of developed and developing countries from 1996 to 2011, the main explanatory variable of interest – financial development measured in terms of private credit and stock market capitalization – is found to stimulate foreign capital conditioned on the intertwining effects of current economic development and institutional quality. But when the data is disaggregated according to the countries’ income levels, the influence on foreign capital inflow from developed countries’ financial development becomes negative in contrast with the developing countries case. Lastly, this new evidence suggests that the relationship of local financial sector development and financial globalization displays reverse causality.