The Impact of Financial Crisis on Investment Flow in Organization of Islamic Countries (Co-integration Approach in Panel Data)

Investment is one of the main determinants of economic growth in macroeconomics literature and has been considered empirically from the view of economics. For this purpose, the aim of this research is to investigate the long-run relationship between investment and explanatory variables such as real interest rate, government expenditure, trade openness and financial crisis in 57 (OIC) countries during the 1960-2019. The long-run relationship has been investigated by applying Westerlund panel co-integration technique. The results of model estimation indicate that the real interest rate and financial crisis have negative and trade openness has positive and significant effect on the flow of investment in these countries. Hence, the main policy implication of this study is that the policy makers should adopts the best policies to control of interest rate and inflation to improve the investment and economic growth in these countries.