Impact of central bank independence, transparency and institutional quality on foreign equity portfolio allocation: a cross-country analysis
In this study, we analyse the effects of central bank independence (CBI) and central bank transparency (CBT) and their interactions with institutional quality on foreign equity portfolio inflows. Employing a dataset from 42 countries over the period from 2001-2014, we find strong evidence that independent and transparent central bank has a positive and significant influence on foreign equity investment inflows. Further analysis shows that institutional quality interacts with central bank independence and transparency in attracting foreign equity portfolio. Our results are robust to alternative specifications, endogeneity concerns and that economic policy uncertainty increases asymmetric information and deters foreign equity portfolio investment inflows.
The file attached to this record is the author's final peer reviewed version. The Publisher's final version can be found by following the DOI link.
Citation : Kwabi, F. O.,Boateng, A. and Du, A. (2020) Impact of central bank independence, transparency and institutional quality on foreign equity portfolio allocation: a cross-country analysis. International Review of Financial Analysis, 69, 101464
Research Institute : Finance and Banking Research Group (FiBRe)
Peer Reviewed : Yes