Capital inflows and economic growth: does the role of institutions matter?
Recent evidence shows that institutions figure prominently in explaining the ‘Lucas paradox’. Using a threshold regression model, we extend this evidence to a situation where institutions index the relationship between foreign capital inflows and economic growth. We find strong and robust evidence t...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
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International Institute of Finance and Economics
2015
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| Online Access: | http://psasir.upm.edu.my/id/eprint/43994/ http://psasir.upm.edu.my/id/eprint/43994/1/Capital%20inflows%20and%20economic%20growth%20does%20the%20role%20of%20institutions%20matter.pdf |
| _version_ | 1848850376775696384 |
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| author | Slesman, Ly Baharumshah, Ahmad Zubaidi Wohar, Mark E. |
| author_facet | Slesman, Ly Baharumshah, Ahmad Zubaidi Wohar, Mark E. |
| author_sort | Slesman, Ly |
| building | UPM Institutional Repository |
| collection | Online Access |
| description | Recent evidence shows that institutions figure prominently in explaining the ‘Lucas paradox’. Using a threshold regression model, we extend this evidence to a situation where institutions index the relationship between foreign capital inflows and economic growth. We find strong and robust evidence that portfolio equity (including foreign direct investment) and debt inflows have positive effects on growth only in countries with high‐quality institutions. Countries that fall below the threshold level of institutional quality record either insignificant or negative effects. This paper provides a possible explanation on the so‐called Lucas paradox. |
| first_indexed | 2025-11-15T10:05:19Z |
| format | Article |
| id | upm-43994 |
| institution | Universiti Putra Malaysia |
| institution_category | Local University |
| language | English |
| last_indexed | 2025-11-15T10:05:19Z |
| publishDate | 2015 |
| publisher | International Institute of Finance and Economics |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | upm-439942022-03-14T04:42:21Z http://psasir.upm.edu.my/id/eprint/43994/ Capital inflows and economic growth: does the role of institutions matter? Slesman, Ly Baharumshah, Ahmad Zubaidi Wohar, Mark E. Recent evidence shows that institutions figure prominently in explaining the ‘Lucas paradox’. Using a threshold regression model, we extend this evidence to a situation where institutions index the relationship between foreign capital inflows and economic growth. We find strong and robust evidence that portfolio equity (including foreign direct investment) and debt inflows have positive effects on growth only in countries with high‐quality institutions. Countries that fall below the threshold level of institutional quality record either insignificant or negative effects. This paper provides a possible explanation on the so‐called Lucas paradox. International Institute of Finance and Economics 2015 Article PeerReviewed text en http://psasir.upm.edu.my/id/eprint/43994/1/Capital%20inflows%20and%20economic%20growth%20does%20the%20role%20of%20institutions%20matter.pdf Slesman, Ly and Baharumshah, Ahmad Zubaidi and Wohar, Mark E. (2015) Capital inflows and economic growth: does the role of institutions matter? International Journal of Finance and Economics, 20 (3). pp. 253-275. ISSN 1947-2757; ESSN: 1947-2765 https://onlinelibrary.wiley.com/doi/full/10.1002/ijfe.1514 10.1002/ijfe.1514 |
| spellingShingle | Slesman, Ly Baharumshah, Ahmad Zubaidi Wohar, Mark E. Capital inflows and economic growth: does the role of institutions matter? |
| title | Capital inflows and economic growth: does the role of institutions matter? |
| title_full | Capital inflows and economic growth: does the role of institutions matter? |
| title_fullStr | Capital inflows and economic growth: does the role of institutions matter? |
| title_full_unstemmed | Capital inflows and economic growth: does the role of institutions matter? |
| title_short | Capital inflows and economic growth: does the role of institutions matter? |
| title_sort | capital inflows and economic growth: does the role of institutions matter? |
| url | http://psasir.upm.edu.my/id/eprint/43994/ http://psasir.upm.edu.my/id/eprint/43994/ http://psasir.upm.edu.my/id/eprint/43994/ http://psasir.upm.edu.my/id/eprint/43994/1/Capital%20inflows%20and%20economic%20growth%20does%20the%20role%20of%20institutions%20matter.pdf |