Foreign Institutional Investment in India : Determinants and the Impact of Crises

This paper identifies the determinants of FII inflows to India by taking various ‘push’ and ‘pull’ factors as well as two dummy variables to account for the financial crisis of 1997 and 2008. Starting with a multiple regression framework, we then employ the principal component analysis to augment the model’s analytical richness. Our results indicate the important determinants as returns on MSCI Emerging Market Index, past values of FII inflows and Index of Industrial Production (IIP). Further, the crisis of 2008 is found to have a significant impact on net FII flows