IMPACT OF FDI ON STOCK MARKET DEVELOPMENT: AN EMPIRICAL INVESTIGATION

ABSTRACT The paper investigates the impact of FDI on the stock market development of India. The key interest revolves around the complementary or substituting role of FDI in the stock market development of India. The study also examines the other major contributing factors towards the development of stock market. An ARDL bound testing approach is used for long-run relationship among variables and the error correction model is used for short run dynamics. Our results support the complementary role of FDI in the stock market development of India. Other macroeconomic variables affecting stock market development are domestic savings, GNP per capita, and inflation