IDEAS home Printed from https://ideas.repec.org/a/cup/jinsec/v16y2020i6p931-953_9.html
   My bibliography  Save this article

Financial globalization and institutions in Africa: the case of foreign direct investment, central bank independence and political institutions

Author

Listed:
  • Agoba, Abel Mawuko
  • Agbloyor, Elikplimi
  • Gyeke-Dako, Afua Agyapomaa
  • Acquah, Mac-Clara

Abstract

In this paper, we examine the bi-directional relationship between financial globalization (proxied by foreign direct investment (FDI) flows) and economic institutions (proxied by central bank independence (CBI)) taking into consideration the role of political institutions. We test our argument on a sample of 48 African countries (1970–2012) using a two-step System Generalized Methods of Moments, with collapsed instruments and Windmeijer robust standard errors. Using two proxies for CBI, the study finds that while legal CBI does not have a significant impact on FDI, high central bank governor turnover rates have a significantly negative impact on FDI inflows. However, higher levels of political institutions significantly enhance the impact of legal CBI on FDI inflows, and dampen the impact of high central bank governor turnover rates on FDI inflows. The study also shows that, higher FDI inflows have a significantly positive impact on both legal and de facto CBI. This impact is accelerated in countries characterized by higher levels of political institutions.

Suggested Citation

  • Agoba, Abel Mawuko & Agbloyor, Elikplimi & Gyeke-Dako, Afua Agyapomaa & Acquah, Mac-Clara, 2020. "Financial globalization and institutions in Africa: the case of foreign direct investment, central bank independence and political institutions," Journal of Institutional Economics, Cambridge University Press, vol. 16(6), pages 931-953, December.
    • Handle: RePEc:cup:jinsec:v:16:y:2020:i:6:p:931-953_9
    as

    Download full text from publisher

    File URL: https://www.cambridge.org/core/product/identifier/S1744137420000193/type/journal_article
    File Function: link to article abstract page
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Joshua Yindenaba Abor & Daniel Ofori-Sasu & Amira El-Shal & George Nana Agyekum Donkor, 2024. "Firms’ access to finance, export trade channels and exports in Africa," International Journal of Economic Policy Studies, Springer, vol. 18(2), pages 415-453, August.
    2. Cham, Yaya, 2023. "Financial Globalization and Bank Lending: The Limits of Domestic Monetary Policy in The Gambia," MPRA Paper 117026, University Library of Munich, Germany.
    3. Yin, Hua-Tang & Chang, Chun-Ping & Anugrah, Donni Fajar & Gunadi, Iman, 2023. "Gender equality and central bank independence," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 661-672.
    4. Pham Thai Binh & Trang Thi Thuy Nguyen, 2024. "Do institutions advocate tax simplification? Insights from a panel of 88 countries," Economic Change and Restructuring, Springer, vol. 57(3), pages 1-39, June.
    5. Zhao, Yanping & Chen, Qing & de Haan, Jakob, 2023. "Does central bank independence matter for the location choices of Chinese firms’ foreign investments?," International Business Review, Elsevier, vol. 32(4).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cup:jinsec:v:16:y:2020:i:6:p:931-953_9. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kirk Stebbing (email available below). General contact details of provider: https://www.cambridge.org/joi .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.