Relationship between FDI and Financial Market Development: An Evidence from South Asian Countries

Abstract

This research clarifies the relationship between FDI and Financial Market Development. For this aim, we hereby consider 4 emerging markets of South Asia. In this research, used indicators from the growth of both stock markets as well as the banking sector. The data range from 1996 to 2019. We used Granger causality as well as Regression analysis. In this research observe the positive relationship between FDI and FMD. In this research used the unit root test to check the stationary of FDI and FMD variables. The positive correlation between FDI and FMD variables. Used the Granger Causality test to check the causal relation between FDI and FMD variables. This research suggests that country is rich in natural resources that are taken bend in attracting FDI to the country. Pakistan is rich in natural resources. Monterey and Fiscal policy use in decision making FDI in Pakistan.