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FDI and Economic Growth — Does the Quality of Banking Development Matter?

Gadjah Mada International Journal of Business

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Title FDI and Economic Growth — Does the Quality of Banking Development Matter?
 
Creator Haji Mohd, Nor Hakimah
Low, Soo-Wah
Md Nor, Abu Hassan Shaari
Ghazali, Noor A.
 
Description This study examines the role of banking development quality in the FDI-growth nexus from 1998 to 2009. Banking development quality is measured using two standardized intermediation  cost indicators and an index of banking development quality that is constructed based on the following indicators: overhead costs to total assets and net interest margin. The results for developed countries show that, on its own, FDI is negatively related to economic growth. However, when FDI is interacted with a banking development quality index, the quality of banking development is found to play a positive role in influencing the effects of FDI on economic growth. This suggests that the quality of banking development serves as an absorptive capacity that allows developed countries to benefit from the positive growth effects of FDI. On the contrary, for emerging countries, the findings indicate that banking development quality plays no role in influencing the impact of FDI on economic growth. This implies that the quality of banking development in emerging countries has yet to reach a level that allows it to importantly influence the growth effects of FDI.       
 
Publisher Master of Management, Faculty of Economics and Business, Universitas Gadjah Mada
 
Contributor —
 
Date 2014-09-29
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://journal.ugm.ac.id/gamaijb/article/view/5472
 
Source Gadjah Mada International Journal of Business; Vol 15, No 3 (2013): September - December; 287-303
2338-7238
1411-1128
 
Language eng
 
Relation http://journal.ugm.ac.id/gamaijb/article/view/5472/4446