G24 - Investment Banking; Venture Capital; Brokerage; Ratings and Ratings AgenciesReturn

The aim of this study is to investigate the relationship between foreign direct investment and economic growth in seven emerging countries. Past empirical studies have failed to estimate the long run relationship between the variables in these countries, which has created a gap in the literature. Data was collected from the United Nations Conference on Trade and Development and World Bank Indicator from 1990 to 2017, and the Johansen Fisher Panel Cointegration and Pairwise Dumitrescu Hurlin Panel Causality Tests were utilised to address the objective of the study. Consequently, the empirical results show that FDI, GDP per capita, growth rate and economic growth have a long run equilibrium relationship. Also, there is an existence of one-way feedback which runs from FDI to economic growth. Based on these findings, this study recommends among others that the policy makers in the emerging countries should ensure the sustainability of the rate of economic growth and embark on more foreign investment-oriented policies that would catalyse further attraction of FDI inflows into their economies.

The application, or to be more precise, the misapplication of securitization in the mortgage market had fatal consequences for the financial sector worldwide. More over securitization techniques enabled single banks to reduce their individual risk while at the same time transferred greater risk to the financial system. Meanwhile a lot was written on the causes for the recent financial crisis. In most cases inadequate ratings provided by the credit rating agencies and different principal agency problems were addressed. I argue that international and national financial supervisors established an inadequate framework for financial regulation and supervision, and among other failures, even supported credit rating agencies to further establish their businesses. Further on, I argue that early warning indicators of systemic risk in the financial sector and signs of the coming turmoil were irresponsibly ignored at the time they were perceived. What turned obvious during and after the recent financial turmoil is that capital regulation failed to reach its main goal - ensuring stability of the financial system. In particular, securitization and related credit risk transfer products were adequately treated neither in Basel I nor in Basel II. With the development of both Basel Accords capital ratios became the center of banking regulation. However, capital ratios are obviously not sufficient as a measure for a systemic financial stability. It is time to ask if the developments in Basel II are the right way of banking regulation and supervision and in particular, if capital ratios can be the centre of banking regulation?