Abstract

This study investigates the nexus between financial development, institutional quality, globalization, and foreign direct investment (FDI) in five selected ASEAN countries Brunei Darussalam, Cambodia, Laos, the Philippines, and Myanmar over the period 2000–2021. Employing panel data regression using the Panel Least Squares (PLS) method, this study examines both the direct effects and the interaction between financial development and globalization on FDI inflows. The results reveal that financial development and globalization significantly and positively affect FDI. However, institutional quality does not show a direct significant effect. Interestingly, the interaction between financial development and globalization yields a significant negative coefficient, Keywords suggesting that without robust institutional support, the combined effect may hinder rather than promote FDI. These findings highlight the importance of coherent policy reforms that strengthen institutions alongside financial and global integration to foster sustainable FDI growth.

Keywords: ASEAN-5, financial development, institutional quality, globalization, foreign direct investment.