Investigating the impact of domestic economic dynamics on foreign portfolio investment in Namibia
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Date
2020
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Publisher
University of Namibia
Abstract
This study investigated the impact of domestic economics dynamics on foreign portfolio
investment (FPI) in Namibia for the period 1986-2016. The study used annual and sec ondary data sourced from the Bank of Namibia (BoN), the Namibia Statistic Agency
(NSA) and the World Bank. Explanatory variables such as inflation rate, trade openness,
lending interest rate and gross domestic product (GDP) were used to explain the inflow
of foreign portfolio investment. E-views statistical package was utilised to analyse and
estimate the time series model. The study employed the methods of ARDL Cointegra tion (Bound cointegration) technique to establish whether variables exhibits the long
run relationship and Granger causality approach to assess the causality relationship be tween FPI and the domestic economic dynamics. According to the regression results, the
second lag of GDP, fourth lag of lending interest rate as well as the second lag of trade
openness were found to be the most significant factors that positively influence the in flow of FPI in the Namibian Economy. Whereas, FPI is also negatively influenced by its
own lag values and by inflation rate. The study recommended that the Government
should create more flexible policies and investment regulations that protect and earn for eign capital investors' confidence in Namibia. Furthermore, the Government should em power the relevant institutions that deal with correction and keeping of data that can en able Investors to access investment information easily. Lastly, the Government should
keep its membership with SADC, SACU, and European Union as part of the trade open ness incentives to attract FPI in the country
Description
A thesis submitted in partial fulfilment of the requirements for the Degree of Master of Business Administration Finance
Keywords
Foreign Portfolio Investment (FP 1), Domestic economic dynamics, ARDL, Cointegration, Bound test, Time Series Data, Namibia, University of Namibia