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Putri, A. F. E., Suci, S. C., & Zahara, V. M. (2024). Financial Development Shock and Foreign Direct Investment in Indonesia. KnE Social Sciences, 9(14), 185–206. https://doi.org/10.18502/kss.v9i14.16100

https://doi.org/10.18502/kss.v9i14.16100

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authors

  • Alifia Febiana Erwansyah Putri

    Alifia Febiana Erwansyah Putri

    Sultan Ageng Tirtayasa University
  • Stannia Cahaya Suci

    Stannia Cahaya Suci

    Sultan Ageng Tirtayasa University
  • Vadilla Mutia Zahara

    Vadilla Mutia Zahara

    Sultan Ageng Tirtayasa University

Published Date

  • May 3, 2024

Financial Development Shock and Foreign Direct Investment in Indonesia

KnE Social Sciences / 8th Sriwijaya Economics, Accounting, and Business Conference (8th SEABC 2023) / Pages 185–206

Abstract

This study analyzed the response of Foreign Direct Investment (FDI) due to the shock on financial development in Indonesia from January 2010 to December 2022. The variables used in this research are FDI and financial development, which measure financial development using traditional measurements such as the Amount of Money in Supply, Credit, and Market Capitalization. Interest Rate and Trade Openness Variables were used as control variables. The study used the VECM method. Results show that in response of the shock on financial development on FDI, Money Supply is positive, Credit negative, and Market Capitalization negative.


Keywords: foreign direct investment, financial development, money supply, credits, market capitalization

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