Published date: May 03 2024

Journal Title: KnE Social Sciences

Issue title: 8th Sriwijaya Economics, Accounting, and Business Conference (8th SEABC 2023)

Pages: 185–206

DOI: 10.18502/kss.v9i14.16100

Alifia Febiana Erwansyah PutriSultan Ageng Tirtayasa University

Stannia Cahaya Sucistanniacs@untirta.ac.idSultan Ageng Tirtayasa University

Vadilla Mutia ZaharaSultan Ageng Tirtayasa University

This study analyzed the response of Foreign Direct Investment (FDI) due to the shock on financial development in Indonesia from January 2010 to December 2022. The variables used in this research are FDI and financial development, which measure financial development using traditional measurements such as the Amount of Money in Supply, Credit, and Market Capitalization. Interest Rate and Trade Openness Variables were used as control variables. The study used the VECM method. Results show that in response of the shock on financial development on FDI, Money Supply is positive, Credit negative, and Market Capitalization negative.

Keywords: foreign direct investment, financial development, money supply, credits, market capitalization

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