Investment Under Risks and Uncertainty in Afghanistan

This paper investigates the state of low investment in Afghanistan by studying how investment decisions interact with risks and uncertainty in the presence of underdeveloped financial markets. The analysis shows that investing firms experience a hi...

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Main Authors:	Farazi, Subika, Rostom, Ahmed, Sinha, Rishabh
Format:	Working Paper
Language:	English
Published:	World Bank, Washington, DC 2018
Subjects:	INVESTMENT INVESTMENT DECISIONS INVESTMENT CLIMATE RISKS UNCERTAINTY FINANCIAL FRICTION FINANCIAL MARKETS CRIME CORRUPTION FRAGILE STATES SECURITY FIRM BEHAVIOR
Online Access:	http://documents.worldbank.org/curated/en/181341526388484842/Investment-under-risks-and-uncertainty-in-Afghanistan http://hdl.handle.net/10986/29849

id	okr-10986-29849
recordtype	oai_dc
spelling	okr-10986-298492021-06-08T14:42:46Z Investment Under Risks and Uncertainty in Afghanistan Farazi, Subika Rostom, Ahmed Sinha, Rishabh INVESTMENT INVESTMENT DECISIONS INVESTMENT CLIMATE RISKS UNCERTAINTY FINANCIAL FRICTION FINANCIAL MARKETS CRIME CORRUPTION FRAGILE STATES SECURITY FIRM BEHAVIOR This paper investigates the state of low investment in Afghanistan by studying how investment decisions interact with risks and uncertainty in the presence of underdeveloped financial markets. The analysis shows that investing firms experience a higher probability of being affected by events related to crime and corruption and spend more on security arrangements. Firms that participate in the formal financial sector are also subject to higher levels of risk and uncertainty. As more productive firms face higher risks and uncertainty, a model of resource allocation with heterogeneous firms is used to quantify the economic loss from crime and corruption. The estimated aggregate output loss of 12 percent is significantly higher than the 7 percent loss observed in the absence of the resource allocation channel. 2018-05-16T21:06:34Z 2018-05-16T21:06:34Z 2018-05 Working Paper http://documents.worldbank.org/curated/en/181341526388484842/Investment-under-risks-and-uncertainty-in-Afghanistan http://hdl.handle.net/10986/29849 English Policy Research Working Paper;No. 8443 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper South Asia Afghanistan
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	INVESTMENT INVESTMENT DECISIONS INVESTMENT CLIMATE RISKS UNCERTAINTY FINANCIAL FRICTION FINANCIAL MARKETS CRIME CORRUPTION FRAGILE STATES SECURITY FIRM BEHAVIOR
spellingShingle	INVESTMENT INVESTMENT DECISIONS INVESTMENT CLIMATE RISKS UNCERTAINTY FINANCIAL FRICTION FINANCIAL MARKETS CRIME CORRUPTION FRAGILE STATES SECURITY FIRM BEHAVIOR Farazi, Subika Rostom, Ahmed Sinha, Rishabh Investment Under Risks and Uncertainty in Afghanistan
geographic_facet	South Asia Afghanistan
relation	Policy Research Working Paper;No. 8443
description	This paper investigates the state of low investment in Afghanistan by studying how investment decisions interact with risks and uncertainty in the presence of underdeveloped financial markets. The analysis shows that investing firms experience a higher probability of being affected by events related to crime and corruption and spend more on security arrangements. Firms that participate in the formal financial sector are also subject to higher levels of risk and uncertainty. As more productive firms face higher risks and uncertainty, a model of resource allocation with heterogeneous firms is used to quantify the economic loss from crime and corruption. The estimated aggregate output loss of 12 percent is significantly higher than the 7 percent loss observed in the absence of the resource allocation channel.
format	Working Paper
author	Farazi, Subika Rostom, Ahmed Sinha, Rishabh
author_facet	Farazi, Subika Rostom, Ahmed Sinha, Rishabh
author_sort	Farazi, Subika
title	Investment Under Risks and Uncertainty in Afghanistan
title_short	Investment Under Risks and Uncertainty in Afghanistan
title_full	Investment Under Risks and Uncertainty in Afghanistan
title_fullStr	Investment Under Risks and Uncertainty in Afghanistan
title_full_unstemmed	Investment Under Risks and Uncertainty in Afghanistan
title_sort	investment under risks and uncertainty in afghanistan
publisher	World Bank, Washington, DC
publishDate	2018
url	http://documents.worldbank.org/curated/en/181341526388484842/Investment-under-risks-and-uncertainty-in-Afghanistan http://hdl.handle.net/10986/29849
_version_	1764470543973613568

Investment Under Risks and Uncertainty in Afghanistan

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