Journal of Siberian Federal University. Humanities & Social Sciences / Institutional Environment and Investment Dynamics: An Analysis of Direct and Indirect Impacts

Full text (.pdf)
Issue
Journal of Siberian Federal University. Humanities & Social Sciences. 2025 18 (12)
Authors
Suslov, Nikita I.; Wei Feng; Isupova, Ekaterina N.; Ivanova, Anastasiya I.
Contact information
Suslov, Nikita I.: Institute of Economics and Industrial Engineering of the Siberian Branch of the Russian Academy of Sciences Novosibirsk, Russian Federation; ORCID: 0000-0001-8899-7906; Wei Feng: Heilongjiang University Harbin, People’s Republic of China; ORCID: 0009-0009-6382-342X; Isupova, Ekaterina N.: Institute of Economics and Industrial Engineering of the Siberian Branch of the Russian Academy of Sciences Novosibirsk, Russian Federation; ; ORCID: 0000-0003-3931-3373; Ivanova, Anastasiya I.: Institute of Economics and Industrial Engineering of the Siberian Branch of the Russian Academy of Sciences Novosibirsk, Russian Federation; ORCID: 0000-0001-8969-988X
Keywords
investment demand; quality of institutions; rules of law
Abstract

The article examines the direct and indirect effects of institutional quality on investment demand. Using the Rule of Law as a factor for institutional quality and a large cross-country sample and up-to-date data (2002–2022) with dynamic panel data analysis, GMM estimators, it is shown that weak institutions could slow investment demand by approximately 10 percent. In addition, the article finds the indirect influence of the institutional environment through the reduced sensitivity of investments to market regulators. It was empirically shown that under weak institutional conditions, and change in the interest rate leads to smaller changes in the level of investment demand. Robustness checks of the estimates support the reliability of the obtained results. From a policy perspective, this paper provides valuable insights for policymakers and practitioners on the effectiveness of targeted interventions to stimulate the investment demand

Pages
2426–2437
EDN
LENVET
Paper at repository of SibFU
https://elib.sfu-kras.ru/handle/2311/158001

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