Relationship between international portfolio investments and the country governance quality

Based on panel data analysis of 18 emerging market countries from 2002 to 2018, the impact of governance quality on international portfolio investments was examined. As a result of the analysis, it was observed that the quality of governance indicators, excluding political stability and absence of violence, had a positive effect on international portfolio investments. Voice and accountability were observed to be the variable that most affects portfolio investments. Voice and accountability were followed by government effectiveness. Control of corruption, rule of law and regulatory quality were other indicators of governance that affected portfolio investments respectively. In this study, foreign direct investments, current account deficit, stock market size and stock market returns were used as control variables. As a result of the analysis, it was concluded that there is a negative relationship between foreign direct investments, current account deficit and international portfolio investments. There is also a positive relationship between stock market size, stock market returns and international portfolio investments. Keywords: Governance, International Portfolio Investments, Financal Liberalization