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Article
Foreign direct investment and stock market development: Evidence from a “new” emerging market
Journal of Economic Studies
  • Athanasios Tsagkanos, Panepistimion Patron
  • Costas Siriopoulos, Zayed University
  • Konstantina Vartholomatou, Panepistimion Patron
Document Type
Article
Publication Date
1-7-2019
Abstract

© 2019, Emerald Publishing Limited. Purpose: The purpose of this paper is to examine two novel theories that concern the relationship between stock market development (SMD) and foreign direct investment (FDI). The authors focus on Greece that was demoted to the emerging market category in 2013–2014 in the international lists. Design/methodology/approach: This study is based on the period 1988–2014 that includes the sub-periods 1988–2001 (emerging market) and 2002–2014 (developed market). The authors adopt cointegration methods examining, on the one hand, if the relationship between SMD and FDI is positive or negative and, on the other hand, if it is long run or short run. The authors complete the analysis using the Markov Switching regression model for the test of robustness. Findings: The results exhibit a weak positive and symmetric long-run relationship for the full period. In the first sub-period, the relationship is strong but in the second sub-period it is not significant. The results are confirmed by the Markov Switching regression model. Originality/value: The precise definition of a theoretical framework that is tested by a compact empirical methodology leads to a novel suggested policy that will upgrade the Greek market to developed market as soon as possible.

Publisher
Emerald Group Publishing Ltd.
Disciplines
Keywords
  • Emerging market,
  • FDI,
  • Greece,
  • Stock market development
Scopus ID
85058622559
Indexed in Scopus
Yes
Open Access
No
https://doi.org/10.1108/JES-06-2017-0154
Citation Information
Athanasios Tsagkanos, Costas Siriopoulos and Konstantina Vartholomatou. "Foreign direct investment and stock market development: Evidence from a “new” emerging market" Journal of Economic Studies Vol. 46 Iss. 1 (2019) p. 55 - 70 ISSN: <a href="https://v2.sherpa.ac.uk/id/publication/issn/0144-3585" target="_blank">0144-3585</a>
Available at: http://works.bepress.com/costas-syriopoulos/19/