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The Volatility of Foreign Portfolio Investment and the Access to Finance of Small Listed Firms
Author(s) -
Knill April,
Lee Bong Soo
Publication year - 2014
Publication title -
review of development economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.531
H-Index - 50
eISSN - 1467-9361
pISSN - 1363-6669
DOI - 10.1111/rode.12101
Subject(s) - volatility (finance) , portfolio , economics , foreign direct investment , foreign portfolio investment , portfolio investment , finance , monetary economics , capital flows , volatility swap , financial economics , business , implied volatility , return on investment , macroeconomics , open ended investment company , market economy , production (economics) , liberalization
This paper examines the impact of foreign portfolio investment ( FPI ) volatility on the access to capital of small listed firms. The volatility of FPI is significantly associated with decreased access to finance for small listed firms only in years when nations are considered less “creditworthy.” Even in these times, however, the benefits of FPI are not completely depleted. These results underscore the significance of both a good financial system that minimizes capital flow volatility and national creditworthiness in inspiring confidence in foreign investors.