Pull and push factors as determinant of foreign portfolio investment in the emerging market

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Michael Ojo Oke, Adeola Oluwakemi Adejayan, Funsho Tajudeen Kolapo, Joseph Oluseye Mokuolu ORCID logo


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The study investigates the pull and push factors as determinants of foreign portfolio investment flows in the emerging market from 1986 to 2018. The study employs autoregressive distributed lag (ARDL) bound cointegration test and ARDL error correction model (ECM). This work is intended to explore the determinants of foreign portfolio investment (FPI) in Nigeria and compare the result explored by Kaur and Dhillon (2010) in India. The result revealed that of all the explanatory variables, only MCAP, DMINT, REER, USGS and USINFR have a positive effect on FPI while GDPGR, USGDPGR, USGS and USINFR are significant. From the result of the analysis, the study agrees with Kaur and Dhillon (2010) that the host country gross domestic product (GDP) growth rates and the United States of America (the U.S.A.) inflation rates are among the significant pull and push factors that determine FPI flows in the long run. Based on these findings, the study recommends that economic policymakers in the host country should be more committed to strengthening its economy by boosting its GDP in order to push foreign investors to the economy since the dwindling in economic growth, low rate of return and rise in inflation rates of the developed countries such as the U.S.A. could push foreign investors to the emerging markets.

Keywords: Foreign Portfolio Investment, Foreign Investment, Pull Factors, Push Factors

Authors’ individual contribution: Conceptualization – M.O.O. and A.O.A.; Methodology – A.O.A.; Formal Analysis – M.O.O.; Resources – F.T.K.; Writing – Original Draft – A.O.A.; Writing – Review & Editing – A.O.A. and J.O.M.; Visualization – J.O.M.; Supervision – M.O.O.; Project Administration – M.O.O. and A.O.A.; Funding Acquisition – M.O.O., A.O.A., F.T.K., and J.O.M.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: F21, F32, F41

Received: 14.09.2020
Accepted: 14.12.2020
Published online: 16.12.2020

How to cite this paper: Oke, M. O., Adejayan, A. O., Kolapo, F. T., & Mokuolu, J. O. (2020). Pull and push factors as determinant of foreign portfolio investment in the emerging market. Risk Governance and Control: Financial Markets & Institutions, 10(4), 33-43. https://doi.org/10.22495/rgcv10i4p3