FII – Full Form, Benefits and Impact
FII Full Form
The full form of FII is Foreign Institutional Investors. They are a group of investors that invests money in the financial markets of a country other than its own, and is recognized as such by the regulatory authorities of that country.
FII includes financial institutions, such as pension funds, mutual funds, hedge funds, and insurance companies. They can be an important source of capital in developing economies like India.
Factors to be Considered for FII
- FIIs have a direct impact on the country’s stock/securities market, exchange rate, and inflation.
- FIIs can invest in both the primary and secondary stock markets in listed, unlisted, and to-be-listed companies.
- FIIs are more concerned with fund transfers and capital gains in a prospective company.
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Benefits of FII
- FIIs will increase capital inflows into the country.
- They also contribute to economic development by making long-term capital available for projects.
- FII focuses on equity rather than debt which helps in maintaining and improving the capital of the company they are investing in.
Impact of FII on Economy
- Increase economic growth by investing in new businesses and creating jobs.
- Improve market liquidity and efficiency.
- Reduce financial market volatility.
- Assist businesses in raising capital and expanding their operations abroad.
- Influence monetary policy by purchasing or selling government bonds.
Final Word
FII helps in improving the economy by opening new opportunities. They are a vital force in today’s global financial markets. These investors bring much-needed liquidity and diversification to markets around the world, helping to drive economic growth and development. Hence, FIIs are a powerful and creative force for change in the world of finance.
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