Search Results (3)

This study examines how market leadership in Indian equities has structurally shifted away from foreign institutional investors (FIIs) toward domestic institutional investors (DIIs) and mutual funds (MFs), and it evaluates the systemic risks created by this rebalancing. Using monthly transaction data from April 2007 to January 2026, we analyze evolving investment patterns among FIIs, DIIs, and MFs by employing trend analysis, Pearson’s and Spearman’s correlation analyses, phase decomposition, stationarity tests, Granger causality analysis, ARIMA modelling, and GARCH volatility estimation. Since 2021, FIIs have recorded cumulative net outflows exceeding ₹8.68 lakh crore (US$95.36 billion), while DIIs mainly led by mutual funds financed largely through Systematic Investment Plans (SIPs) have made net purchases of over ₹19.37 lakh crore (US$212.67 billion), effectively absorbing FII selling and helping to maintain elevated index levels. The trend continues with SENSEX having remained above 80,000 points through 2025 despite persistent FII disengagement. The DII share of total market purchases rose from approximately 39% in 2017 to over 54% by January 2026, documenting a structural shift in market composition. The results show that DII flows have stayed positively and significantly correlated with SENSEX, with FII flows being significantly negatively correlated. Granger causality tests suggest market-responsive rather than market-driving behavior by domestic institutions. Drawing upon Minsky’s financial instability hypothesis and behavioral finance frameworks, we interpret that prolonged domestic absorption of FII exists where direct fundamental evidence is unavailable. The Minsky-type fragility interpretation is offered as a structured hypothesis for future empirical investigation. The findings carry important implications for retail investors, fund managers, and regulators. Full article

The global value chain has promoted foreign direct investments in emerging markets. Not only resources but also public policies can affect the inflows or outflows of foreign direct investments (FDI). This study investigates the effect of economic policy uncertainty on net foreign direct investment inflows in 48 Asian countries. We use the panel dataset from different sources from 1995 to 2020. Our core dependent variable is net foreign direct investment inflows, and the explanatory variable is economic policy uncertainty. The study’s control variables include trade, GDP per capita, GDP growth, population, financial development, inflation, and employment. We use the generalized system method of moment (SYS_GMM). Furthermore, the robustness of our empirical results is checked by using the different proxy variables of policy uncertainty. Our results confirm the negative effect of policy uncertainty on foreign direct investment inflows in 48 Asian countries. Our results show that foreign investment inflows are more sensitive than domestic investment. The influence of domestic and global uncertainty on inward FDI is greater than domestic investment. Furthermore, the interaction effect of financial development (FD) shows that FD does not affect mitigation of the negative impact of global economic policy uncertainty on foreign investment inflow. In contrast, FD mitigates the adverse effects of domestic policy uncertainty on foreign and domestic investment. The findings imply that policies need to be attractive, effective, and transparent to woo FDI to the emerging markets. Full article

The study focuses on the effects of imports, exports, financial direct investment inflow and financial direct investment outflow on sustainable economic growth expressed by various macroeconomic indicators (gross domestic product, gross domestic savings, gross domestic capital) using the least squares panel method. Sample data were selected for ten Central and Eastern European (CEE) countries and the time frame considered was 2005–2016. Generally, transitional economies have to incorporate strong savings and a steady capital formation in order to achieve higher economic growth via foreign direct investment. Results showed that the analyzed factors played a major role in the sustainable economic growth of CEE countries. Another important and valuable insight of this study is that the financial sector steers the process of achieving sustainable economic growth across CEE countries. Full article