THE DETERMINANTS OF INDIA’S FDI INFLOWS: THE BOUND TEST ANALYSIS

Purpose of the study: This paper aims to empirically examine the determinants of FDI inflows which include policy factors along with macroeconomic aggregates prevailing in India that serve as an important factor for attracting FDI in the country. Methodology: This paper has applied the Auto Regressive Distributed Lag (ARDL) modeling technique to empirically examine the co-integration relationship among FDI inflows and various macroeconomic aggregates prevailing in India to determine the factors affecting the flow of FDI in India. Main Findings: The study finds that there exists a co-integration relationship between the variables in the model. The estimated coefficient reveals that FDI inflows in India are positively influenced by trade openness, domestic investment, moderate domestic prices and exchange rate in the long-run. The outcomes also reveal that FDI inflows are positively influenced by the past level of FDI inflows, the past year of GDP per capita, past level of trade openness and currency exchange rate in the country in the short-run. Applications of the study: The study will be helpful in the formulation of suitable policies towards foreign investment inflows and to optimize its role in the host country. The study will be also helpful to the government for the enrichment of socioeconomic overheads in the host country to maximize the gains from FDI inflows. The novelty of the Study: The outcome of the study with an addition to the existing literature by incorporating the new variables in the model provides a new variable specific influence on FDI inflows in the country. This will also provide a scope for further study by establishing backward and forward spill over effects of FDI inflows in enhancing income, output, and employment in the country

Causal Relationship between Foreign Institutional Investments, Exchange Rate and Stock Market Index i.e. Sensex in India: an Empirical Analysis

Since the global crisis (2008) emerged in the world economy, the inflows of foreign investors increased in developing countries and India was not the exception in terms of huge investment by foreign investors. India’s capital market recognized as an emerging market in the world and growing fast since the economic liberalization and globalization in 1991. Since 1993, when liberalization policies came in to effect and Indian market opened for foreign investment, the FIIs become the driving force for the overall development of economy as well as pose threat in the development. This paper attempts to analyze the impact of currency fluctuations on the investment by the foreign investment investors, for analyzing the impact and causal relationship, Augmented Dickey-Fuller test and Granger Causality test has been applied, and for analyzing FIIs role in the development of Indian capital market linear regression model has been used. After applying the Granger Causality test, we found that FII granger causes Exchange rate. As far as causality relationship is concerned, a unidirectional causality or one-way causality is found from FII towards exchange rate. As far as the causal relationship between the FIIs and SENSEX, FII are only responsible for up to 45.4%. This means that whatever changes have happened in the SENSEX for period under study the FI investments are responsible up to 45.4%. This implies that there are many other macro-economic factors which have indirectly affected the SENSEX in India. Keywords: FIIs, SENSEX, INRUSD, BSE, Volatility, GDP, RBI, FDICausal Relationship between Foreign Institutional Investments, Exchange Rate and Stock Market Index i.e. Sensex in India: an Empirical Analysi

The Determinants of Inflation in India: The Bounds Test Analysis

India is facing a fast rise in the general price level for the last couple of years. This paper seeks to empirically examine the sources of inflation in India both in the long-run and in the short-run by using the cointegration method developed by Pesaran et al. (2000). The empirical findings suggests that in the long-run money supply, depreciation of the rupee and supply bottlenecks puts a pressure on the domestic price level by causing inflation to rise in the country. The analysis reveals that in the long-run domestic factors as monetary growth and supply bottlenecks dominates the external factors for a rise in the domestic prices in the economy. The short-run analysis also reveals that domestic factor money supply and supply bottlenecks dominate the external factor as a measure cause for a persistent rise in the price level in the country. The supply bottlenecks are though a significant factor in the short-run, but its importance in the long-run is relatively small.  Keywords: Inflation, Money Supply, Exchange rate, World Price, GDP gap, Bounds test, ECM JEL Classifications: E31, E51, D51, F4

IMPACT OF FINANCIAL GROWTH ON THE ECONOMIC DEVELOPMENT OF OMAN

Purpose of the study: This paper aims to empirically test the long and short-run effects of financial development on the economic growth of Oman. Methodology: This paper has applied the Unit root test, ARDL Bound Test for Cointegration, CUSUM, and CUSUMSQ Test for testing of hypotheses. The data used to test the relationship between financial development and economic growth covers the period from 1980 to 2017. Main Findings: The major finding of the study suggested that the financial development variables measured in the research influence the economic growth in Oman.  Applications of the Study: This study can be useful to assess the strength of the empirical link between the financial sector and economic growth in Oman as one of the oil-exporting states of the Middle East Region, where such studies are inadequate. The novelty of the Study: The finding of the study with an addition to the existing literature by incorporating the new variables like employment or poverty in the existing model provides new insight on the financial development of Oman. Limitations and forward of the Study: The study has considered a set of data which in general acts as a catalyst for economic development in a particular country.  Implications of the Study: The outcome of the study suits the nature of the country and its socio-economic conditions. The outcomes of the study will not be suitable for every country and may result in spurious outcomes

Effectiveness of monetary policy: Application of modified Peter and Clark (PC) algorithms under Graph-Theoretic Approach

It is common practice that central banks around the world must adopt an inflation targeting framework; based on the assumption that inflation could be reduced by increasing interest rates. On contrary, the theoretical literature and data-based evidences differ remarkably. The arduous attached in finding the true association and causation is the existence of multiple monetary transmission channels. Theoretical literature lists both monetary and non-monetary channels linking interest rate and inflation. However, most of the existing studies are focused on single equation model ignoring other parallel channels. This study is first of its kind where we have developed modified Peter and Clark (PC) algorithm of the Graph-Theoretic approach taking all the monetary and non-monetary channels to determine the causal nexus between monetary policy and inflation. The results show that, causality is running from interest rate towards inflation; suggesting a positive and significant long run relationship of interest rate with inflation in case of Pakistan. Furthermore, monetary policy have cost-side effects on inflation; however, the monetary policy becomes counterproductive whenever high interest rate is used to decrease cost push inflation. Therefore, there is need of serious rethinking about current monetary policy regime.JEL Codes - E4; E5; E42; E5

The Performance Analysis of Saud Bahwan Group, Oman: An Empirical Study

The present study examines the financial performance Saud Bahawan group vis a vis its competitor and its role in the economic development of Oman. From the empirical work carried out it was established that the ROE has increased over the years from 1350 in 2010 to 14245 in 2014.However on the contrary the net assets to book value, earning per share have declined considerably over the years. The debt ratio has too increased from 0.18 to 0.28 which is a marginal increase and that's may have attributed to the decline in the EPS. The results showed that, there is no significance different between return on equity of Saud Bahawan and five other companies chosen for the study. If we just consider the difference of mean in Return on equity of all companies establishes the fact the firm profitability is comparatively better than that of its competitor. Thus the study reveals that the companies chosen for the study were no better than that of the Saud Bahawan group in all the parameters taken for the study. Keywords: financial performance, ROE, EPS & Debt ratio. JEL Classifications: G30, G32, G3

Causation between Consumption, Export, Import, and Economic Growth of Oman

To examine the causation between consumption, export, import, and economic growth for the Sultanate of Oman using yearly time series data collected from the World Bank for 2000-2018. Further, it was tested by basic statistics, the Bound test with the ARDL model, and the Granger-causality tests. The findings of the Bound test analysis indicate the presence of both long-run and short-run associations among competing variables. The ARDL Model result reflects that imports have both short-run and long-run effects, supported by the Granger Causality tests by indicating the presence of unidirectional causality import to economic growth and import to consumption. The outcome of the study revealed that import is essential for economic growth as imports can absorb foreign technology in the domestic economy that can boost the export and further act as an engine of growth. How to Cite:Khan, U., Khan, A. M., Alam, M. D., & Alkatheery,N. (2022). Causation Between Consumption, Export, Import & Economic Growth of Oman. Etikonomi, 21(1), 67-78. https://doi.org/10.15408/etk.v21i1.20034

Roles of green intellectual capital facets on environmental sustainability in Oman

The present study determines the impacts of different types of green intellectual capital such as green human capital, green structural capital, and green relational capital on environmental sustainability in the Sultanate of Oman. It has become a crucial aspect to analyze the effect of green intellectual capital on ecological sustainability. A simple random sample technique is used to assemble data using a structured questionnaire from 205 respondents working at Raysut Cement Company and Salalah Methanol Company in Oman. The covariance-based equation in the structural modeling perspective is used to examine data. The study’s results reveal that green structure-based capital is the only dimension of green Intellectual capital that significantly affects environmental sustainability. In contrast, green human capital and relation-based capital do not substantially affect ecological sustainability. Conclusively, this study also provides ecological strategies that can be useful to enrich organizations to accomplish sustainability