Domestic and Foreign Institutional Investors in Emerging Markets

  • V. Akshara Saradha and Harish MS
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  • V. Akshara Saradha

    Student at SASTRA Deemed University, India

  • Harish MS

    Student at SASTRA Deemed University, India

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In the domain of company law within emerging markets, the roles and regulatory considerations for domestic and foreign institutional investors present dynamic challenges and opportunities. Domestic institutional investors, comprising entities like pension funds, mutual funds, and insurance companies, navigate the regulatory frameworks of their home countries. These regulations often emphasize investor protection, market integrity, and financial stability. In contrast, foreign institutional investors operate across borders and must navigate the legal intricacies of emerging markets. Their involvement is subject to host-country regulations, encompassing compliance with local company laws, disclosure requirements, and corporate governance standards. Striking a balance between attracting foreign investment and safeguarding domestic interests remains a focal point in emerging market company law. The legal landscape shapes the dynamics of corporate governance, decision-making processes, and the protection of investor rights. As emerging markets evolve, the interplay between domestic and foreign institutional investors within the framework of company law plays a pivotal role in shaping the trajectory of these markets and fostering a regulatory environment conducive to sustainable economic growth. In this paper, there is a major comparison between Domestic and Foreign Institutional investors and their impact in India as well as Korean stock exchange. The role of investors in any emerging markets play a vital role in offering substantial growth development. This study investigates how trading by Foreign Investors and Domestic Institutional Investors improves firm- specific information by overall development and how it is incorporated into stock prices synchronicity. It further highlights their impact on investment strategies, corporate governance and economic growth. The comparison between Foreign Investors and Domestic Institutional Investors brings out trading by foreign and domestic investors that led to decrease in stock price synchronicity. Among domestic institutions, short- term investing institutions such as securities and investment play an important role in incorporating firm- specific information into stock price compared to banking and insurance companies that are long- term investing institutions. Foreign investors trading companies are treated better for incorporation of firm- specific information in connection with aggregate domestic institutions. Furthermore, how both foreign and domestic institutional investors form their game plan and how they implement it in an economy and also to find how they hugely impact the upcoming and emerging markets in the Indian economy.


Research Paper


International Journal of Law Management and Humanities, Volume 6, Issue 6, Page 2427 - 2434


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