Salina Kassim
International Islamic University Malaysia

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Journal : Gadjah Mada International Journal of Business

Foreign Portfolio Investment Inflows and Economic PErformance in Malaysia: A Disaggregated Analysis Duasa, Jarita; Kassim, Salina
Gadjah Mada International Journal of Business Vol 10, No 3 (2008): September - December
Publisher : Master of Management, Faculty of Economics and Business, Universitas Gadjah Mada

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Abstract

Based on disaggregated data, this study empirically examines the importance of foreign portfolio investment (FPI) to the Malaysian economic performance. The study adopts the vector error correction model to analyze the relationships between FPI inflows from major investing countries, namely the United States, the United Kingdom, Singapore and Hong Kong and Malaysia’s real GDP using quarterly data covering the period from Q1:1991 to Q3:2007. For further inferences, this study adopts an innovation accounting by simulating variance decompositions and impulse response functions. This study finds that there is a significant positive association between Malaysia’s GDP and U.K.’s FPI inflow, particularly in the long run.