KnE Social Sciences

ISSN: 2518-668X

The latest conference proceedings on humanities, arts and social sciences.

Financial Development Shock and Foreign Direct Investment in Indonesia

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

Authors:

Alifia Febiana Erwansyah PutriSultan Ageng Tirtayasa University

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

Vadilla Mutia ZaharaSultan Ageng Tirtayasa University

Abstract:

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

References:

[1] Huidrom R, Kose MA, Ohnsorge FL. How important are spillovers from major emerging markets? How important are spillovers from major emerg mark. Epub Ahead of Print; 2017. https://doi.org/10.1596/1813-9450-8093

[2] Report IM. Indicators of financial structure, development, and soundness. Indicators of financial structure, development, and soundness. 2005. pp. 15–33.

[3] Raj M. Financial dependence and growth: Further evidence. Appl Econ Lett. 2009;16(3):325–330.

[4] Millah RL, Wibowo W. The effect of financial development on economic growth countries Asean-4. Jurnal Ilmu Ekonomi Terapan. 2021;6(2):293.

[5] Demetriades PO, Hussein KA. Does financial development cause economic growth? Time-series evidence from 16 countries. J Dev Econ. 1996;51(2):387–411.

[6] Dang TT, Pham AD, Tran DN. Impact of monetary policy on private investment: Evidence from Vietnam’s provincial data. Economies. 2020;8(3):1–15.

[7] Kunanti NP, Adry MR. Analisis Pengaruh Financial Development Terhadap Pertumbuhan Ekonomi Di Indonesia. Jurnal Kajian Ekonomi Dan Pembangunan. 2020;2(1):43.

[8] Kong Q, Guo R, Wang Y, Sui X, Zhou S. Home-country environment and firms’ outward foreign direct investment decision: Evidence from Chinese firms. Econ Model. 2020;85:390–399.

[9] Liu H, Islam MA, Khan MA, Hossain MI, Pervaiz K. Does financial deepening attract foreign direct investment? Fresh evidence from panel threshold analysis. Res Int Bus Finance. 2020;53:101198.

[10] Osei MJ, Kim J. Foreign direct investment and economic growth: Is more financial development better? Econ Model. 2020;93:154–161.

[11] Ang JB. Financial development and the FDI-growth nexus: the Malaysian experience. Appl Econ. 2009;41(13):1595–1601.

[12] Shahbaz M, Topcu BA, Sar?gül SS, Vo XV. The effect of financial development on renewable energy demand: The case of developing countries. Renew Energy. 2021;178:1370–1380.

[13] Ersoy I. Ucinak financijske otvorenosti na financijski razvoj, rast i volatilnost u Turskoj: dokazi dobiveni ardl granicnim testovima. Ekon Istraz. 2011;24(3):33–44.

[14] Desbordes R, Wei SJ. The effects of financial development on foreign direct investment. J Dev Econ. 2017;127:153–168.

[15] Islam MA, Liu H, Khan MA, Islam MT, Sultanuzzaman MR. Does foreign direct investment deepen the financial system in southeast Asian economies? J Multinat Financ Manag. 2021;61:100682.

[16] Contractor FJ, Nuruzzaman N, Dangol R, Raghunath S. How FDI inflows to emerging markets are influenced by country regulatory factors: An exploratory study. J Int Manage. 2021;27(1):100834.

[17] Majeed A, Khan MA, Jiang P, et al. The impact of foreign direct investment on financial development: New evidence from panel cointegration and causality analysis. Journal of Competitiveness. 2021;13(1):95–112.

[18] Juniarti J, Christiawan YJ, Kwistianus H. Market response and future performance of inefficient investment: Over-investment or under-investment. Investment Management And Financial Innovations. 2022;19(4):146–159.

[19] Syarkani Y. Pengaruh Market Size, Keterbukaan Pasar Dan Inflasi Terhadap Investasi Asing Langsung/Foreign Direct Investment (FDI) di Negara-Negara ASEAN. Jurnal Ilmiah MEA (Manajemen, Ekonomi, & Akuntansi). 2021; 5(3): 2827–2843.

[20] Barorah F, Malik N, Arifin Z. Analisis Investasi Asing Langsung (Fdi) Di Negara Asean Tahun 2000-2017. Jurnal Ilmu Ekonomi JIE. 2019;3(3):397–409.

[21] Haque MA, Biqiong Z, Arshad MU. Sources of Financial Development and Their Impact on FDI Inflow: A Panel Data Analysis of Middle-Income Economies. Economies. 2022;10(8):182. Epub ahead of print.

[22] Nusantara A, Santosa AB, Nawatmi S. Adakah Peran Penting Pasar Domestik Dalam Mendorong Investasi Asing? 2018. pp. 978–979.

[23] Anwar CJ, Okot N, Suhendra I, et al. Response of exchange rate to monetary policy shocks: An evidence from Indonesia. International Journal of Economics and Finance Studies. 2022;14(1):443–446.

[24] Mankiw. Makroekonomi. Erlangga; 2018.

[25] Salvatore D. Ekonomi Internasional (Edisi 9). Salemba Empat; 2014.

Recommendations
MAPPING THE DIGITAL FOOTPRINT OF WOMEN ENTREPRENEURS IN EAST JAVA
Nila Cahayati et al., KNE SOCIAL SCIENCES, 2024
JAVA NORTH COAST WOMEN'S CONTRIBUTION TO ECONOMIC AND RELIGIOUS DYNAMICS: IT IS TIME TO BE A PUBLIC KNOWLEDGE
Sofa Marwah et al., KNE SOCIAL SCIENCES, 2023
PERCEPTION OF SMES IN EAST JAVA ON DIGITALIZATION TRANSFORMATION IN BUSINESS
Vika Annisa Qurrata et al., KNE SOCIAL SCIENCES, 2024
PROGRESS OF TOURISM DEVELOPMENT IN EAST KALIMANTAN PROVINCE, INDONESIA: A PATH TO REALIZE THE SUSTAINABLE ECONOMIC SECTOR
Zahrotu A'yunin Basyir et al., KNE SOCIAL SCIENCES, 2024
ARE INDONESIAN NETIZENS REALLY UNCIVILIZED? INDONESIAN NETIZEN'S RESPONSE TO MSP'S INAUGURATION AS CHAIRMAN OF BRIN MAIN BOARD
Agung Pramujiono et al., KNE SOCIAL SCIENCES, 2022
THE LANGUAGE ATTITUDES OF INDONESIAN LANGUAGE TEACHERS TOWARD THE ACEHNESE LANGUAGE
Mhd Pujiono et al., KNE SOCIAL SCIENCES, 2023
ACADEMIC RESILIENCE PROFILE: STUDY IN SAMPANG DISTRICT WITH THE LOWEST HUMAN DEVELOPMENT INDEX IN EAST JAVA
Surahman . et al., KNE SOCIAL SCIENCES, 2024
EMPOWERMENT OF RUGBY AS THE ECONOMIC DRIVER FOR THE MSMES: IN COLLABORATION WITH THE INDONESIAN RUGBY UNION (PRUI) WEST JAVA
Cici Cintyawati et al., KNE SOCIAL SCIENCES, 2023
STRUCTURAL DAMAGE LOCALIZATION AND QUANTIFICATION BASED ON A CEEMDAN HILBERT TRANSFORM NEURAL NETWORK APPROACH: A MODEL STEEL TRUSS BRIDGE CASE STUDY
SENSORS, 2020
SYSTEMATIC POTENTIAL ANALYSIS ON RENEWABLE ENERGY CENTRALIZED CO-DEVELOPMENT AT HIGH ALTITUDE: A CASE STUDY IN QINGHAI-TIBET PLATEAU
ENERGY CONVERSION AND MANAGEMENT, 2022
Powered by
Download
HTML
Cite
Share
statistics

190 Abstract Views

104 PDF Downloads