ABSTRACT:
This study examines the impact of loose monetary policy, including money supply and interest rates, significantly influences Foreign Direct Investment (FDI). Moreover, it investigates the moderating effect of inflation on the interaction between monetary policy and FDI absorption. This study applied quantitative research methods and designed a 5-point Likert scale survey. Then, the study conducted descriptive analysis, Cronbach's Alpha test, EFA and moderator variable analysis. The results proved the money supply (0.82), interest rate (-0.65) influence FDI absorption in emerging economies and moderating unstandardised coefficient (0.723) of inflation. This research provides a novel exploration of how loose monetary policy impacts FDI adoption in emerging economies, emphasising the moderating role of inflation. Also, it offers actionable insights for policymakers to enhance FDI absorption while addressing the challenges posed by inflation dynamics.
KEYWORDS:
FDI, Money supply, Interest rate, Moderating role of inflation, emerging economies.
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