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Does the Sustainable PPI Investments Promote Financial Market’s Sustainable Development?

Author

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  • Tong Fu

    (Institute of Industrial Economics, Jiangxi University of Finance and Economics, Nanchang 330013, China)

  • Hongzhang Chen

    (The Collaborative Innovation Center, Jiangxi University of Finance and Economics, Nanchang 330022, China)

  • Yongrok Choi

    (Department of International Trade, Inha University, Inha-ro 100, Nam-gu, Incheon 402-751, Korea)

Abstract

Since the late 1980s, most developing countries adopt a policy of attracting investments for Private Participation in Infrastructure (PPI) projects. With a perspective of sustainability, this paper offers a first attempt to examine whether the sustainable PPI investments promote financial market development. First, we demonstrate how the PPI policy enlargers the size of financial markets and then fosters the liquidity of financial markets in the static and dynamic conditions. Using the data from 33 developing countries during 1997–2012, we discover the significant promotion effect of PPI investments on the development of financial markets in the dimensions of size and liquidity. Additionally, we confirm the significant mediator effect of financial market size for the positive relationship between PPI investments and financial market liquidity. Both the promotion effect and mediation effect are robust to different control variables and estimation techniques used.

Suggested Citation

  • Tong Fu & Hongzhang Chen & Yongrok Choi, 2016. "Does the Sustainable PPI Investments Promote Financial Market’s Sustainable Development?," Sustainability, MDPI, vol. 8(2), pages 1-18, January.
    • Handle: RePEc:gam:jsusta:v:8:y:2016:i:2:p:120-:d:63087
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