The Long-Run Impact of Globalizationo Portfolio Investments: Panel Evidence

Globalization may play an important role in attracting portfolio investment in both short-run and long-run. In order to test the validity of this relation, this study empirically examines the long-run relationship between globalization and portfolio investments by using a balanced panel data of 66 countries covering the period of 2004-2014. The results gathered from panel cointegration tests reveal that there exists a positive statistically significant association between globalization and porfolio investments in both short-run and long-run. According to the findings, if globalization index value goes up by 1% then portfolio investments increase by 5.8% in the long-run whereas this rise is just by 3.9% in the short-run. Besides, panel causality test results show that there is a two-way causality between globalization and portfolio investments.