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Do MNCs spur financial markets in corrupt host countries?

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  • Mohsen Bahmani-Oskooee
  • Shady Kholdy
  • Ahmad Sohrabian

Abstract

This study investigates how MNCs can sway the growth of financial markets in the developing countries with prevalent political corruption. Using annual data of panel of 22 developing countries and applying dynamic generalized method of moment (GMM) technique, we find foreign firms can spur financial markets in the developing countries through direct investment. Furthermore, our results indicate the stimulus effect of foreign investment on financial development is stronger in the more corrupt countries. Copyright Springer Science+Business Media, LLC 2013

Suggested Citation

  • Mohsen Bahmani-Oskooee & Shady Kholdy & Ahmad Sohrabian, 2013. "Do MNCs spur financial markets in corrupt host countries?," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 37(2), pages 308-317, April.
    • Handle: RePEc:spr:jecfin:v:37:y:2013:i:2:p:308-317
    DOI: 10.1007/s12197-011-9199-2
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    More about this item

    Keywords

    Multinational Corporations; Foreign Direct Investment; Financial Markets; Political Corruption; F23; G15; G18;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation

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