Impact of Foreign Direct Investment (FDI) on Stock Market Development in Pakistan

Abstract

This paper is an evaluation of ways Foreign Direct Investment (FDI) has contributed to the improvement of the inventory marketplace in Pakistan. The examine explores the results of inflows of FDI available in the marketplace capitalization, inventory turnover, and the liquidity in standard the use of secondary statistics of the duration 2000-2022 the use of the Pakistan Stock Exchange (PSX) and the State Bank of Pakistan (SBP). Through empirical have a look at, it's been proved that FDI performs an critical position withinside the improvement of the inventory marketplace with the aid of using elevating the performance of the inventory marketplace, boosting buyers self belief and elevating liquidity. The consequences additionally imply that macroeconomic stability, excellent of law and economic infrastructure are a number of the foremost mediating variables in FDI-inventory marketplace relationship. This paper highlights the importance of drawing in sustainable FDI flows with the intention to beautify the boom of the capital markets in Pakistan and recommends coverage movements to accumulate investment-conducive environments.