Do MNCs spur financial markets in corrupt host countries?

Bahmani-Oskooee, Mohsen; Kholdy, Shady; Sohrabian, Ahmad
April 2013
Journal of Economics & Finance;Apr2013, Vol. 37 Issue 2, p308
Academic Journal
This study investigates how MNCs can sway the growth of financial markets in the developing countries with prevalent political corruption. Using annual data of panel of 22 developing countries and applying dynamic generalized method of moment (GMM) technique, we find foreign firms can spur financial markets in the developing countries through direct investment. Furthermore, our results indicate the stimulus effect of foreign investment on financial development is stronger in the more corrupt countries.


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