Abstract
The main objective of this research is to explore the impact of capital inflow on economic growth of South Asian economies (Bangladesh, India, Pakistan and Sri Lanka). The gross domestic saving, commercial bank & other lending and portfolio equity investment are the independent variables and the gross domestic product growth is the dependent variable. This study is consisting on panel-based data and the data was taken for the period of 1981 to 2016, which are 36 years. The data was collected from World Development Indicators (WDI) and Quandl on annual basis. Panel ARDL (PMG) model is applied to analyze the data. The results related to gross domestic saving shows that there is positive and significant long - run relationship present in between gross domestic saving and gross domestic product growth on the other hand the results related to short - run shows that there is negative and non-significant relationship present in between gross domestic saving and gross domestic product growth. The results related to portfolio equity investment shows that there is positive and significant long - run relationship present in between portfolio equity investment and gross domestic product growth on the other hand the results related to short - run shows that there is positive but non-significant relationship present in between portfolio equity investment and gross domestic product growth. The results related to commercial bank & other lending shows that there is negative and non-significant long - run relationship present in between commercial bank & other lending and gross domestic product growth on the other hand the results related to short - run shows that there is negative and non-significant relationship present in between commercial bank & other lending and gross domestic product growth. Keywords: Panel ARDL (PMG), Capital Inflow, Gross domestic Product Growth and South Asian Economies. DOI : 10.7176/DCS/9-4-02 Publication date : April 30 th 2019
Highlights
If any nation wants to enhance the living standard in their country they need the sustainable inflow of capital for maintain the saving and foreign exchange gap, due to this it enhances the rate of growth and capital accumulation
The results related to Bangladesh CBOL indicates that there is negative and non-significant short-run relationship present in between gross domestic product growth and commercial bank & other lending because in above table the probability value is 0.116 and it is more than 5% so there is non-significant relationship present in these variables and the coefficient value of CBOL is -1.28 which indicates that there is negative relationship present in between CBOL and GDPG
The results related to Bangladesh Portfolio Equity Investment (PEI) indicates that there is positive and nonsignificant short-run relationship present in between portfolio equity investment and gross domestic product growth because in above table the probability value is 0.120 and it is more than 5% so there is non-significant relationship present in these variables and the coefficient value of PEI is 2.22 which indicates that there is positive relationship present in between PEI and GDPG
Summary
If any nation wants to enhance the living standard in their country they need the sustainable inflow of capital for maintain the saving and foreign exchange gap, due to this it enhances the rate of growth and capital accumulation. Tang (2015) discussed the overseas capital flow (overseas direct investment & overseas portfolio investment) influence on gross domestic product growth (economic growth) of European Union. The finding indicates that there is positive and important association present among overseas portfolio equity investment and gross domestic product growth. In long run finding indicates that there is important and positive impact of democracy present on gross domestic product growth. The finding indicates that the equity portfolio investment has an unimportant but positive influence on return on equity and gross domestic product growth. The finding shows that, in long run the overseas portfolio investment put forceful impact on gross domestic product growth (economic growth). The finding related to EGLS indicates that there is an unimportant negative association present among overseas portfolio equity investment and gross domestic product growth. The finding shows that there is positive and statistically unimportant association present among overseas portfolio equity investment
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