Analysis of Financial and Investment Markets in D8 Countries

Investment is a component of total demand and could be regarded as a main motivation for economic growth and industrial production. Supply of required finance for the investment projects is essential because of importance of capital investment in the economy of developing countries. Development of financial markets such as capital & monetary markets pave the way for transfer of saving accounts to investors and provision of required finance for the investment projects. In this regard, influence of monetary market growth, development of capital market and inflation as well as Gross Domestic Product (GDP) on the capital formation has been investigated in the present study due to the essential role of capital investment in the economy and development of financial markets and formation of such investment. Results of the study indicate direct impact of monetary market growth and development of capital market on investment trends in D8 countries using Panel data approach for the D8 countries (including Iran, Turkey, Egypt, Indonesia, Malaysia, Pakistan, Nigeria and Bangladesh) during 2003-2010. However investment level revealed to be negatively affected by the inflation. Findings of the study emphasize on financial markets and their role in enhancement of capital investment and at the same time encourage D8 countries to support development and such financial markets as one of the key tools for supply of finance required for the capital projects.