Domestic capital vs. foreign capital new enterprise creation: the case of FDI in India-Reference-Cited by-同舟云学术

Domestic capital vs. foreign capital new enterprise creation: the case of FDI in India

Published:2023-12-01 Issue:4 Volume:19 Page:9-24
ISSN:2719-3454
Container-title:Financial Internet Quarterly
language:en
Short-container-title:

Author:

Sajikumar Tulasidharan¹^ORCID,Da Silva Amândio F. C.²^ORCID

Affiliation:

1. 1 Entrepreneurship Development Institute of India , Ahmedabad , India

2. 2 ISCA, University of Aveiro , GOVCOPP, Portugal, and FCHS, University Fernando Pessoa , Portugal

Abstract

Abstract The attempt of this paper is to find an empirical relationship between Foreign Direct Investment and New Firms (Paid up Capital) and Gross Capital Formation (proxy for business growth) and Credit to Commercial Sector and Gross Capital Formation using the test of stationarity (ADF, PP, and KPSS methods), Johansen Cointegration and Granger’s Causality. The results show that FDI crowds out creation of new firms and capital formation and it is the Credit flow to the commercial sector that causes Gross Capital Formation at current price. It shows domestic flow of credit is more influential in capital formation rather than foreign capital inflow.

Publisher

Walter de Gruyter GmbH

Subject

General Medicine

Link

https://www.sciendo.com/pdf/10.2478/fiqf-2023-0024

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