Cyber Insecurity: The Effect of Cybersecurity Breaches on the Philippine Net Foreign Portfolio Investments

Date

6-2025

Degree

Bachelor of Science in Economics

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Divine Krizza P. Cruz

Committee Member

Richard B. Daite, Gideon P. Carnaje, Maria Angeles O. Catelo

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Abstract

Foreign portfolio investments provide foreign investors with domestic market exposure, yet the impact of cybersecurity breaches on these investments remains understudied. This paper assesses the effects of cybersecurity breach events on the net FPI flows in the Philippines, influencing factors to such events, the Philippine FPI landscape, and cybersecurity trends from January 2012 to October 2024. The study utilizes the Chow test and three event study models.

Results reveal that while major cybersecurity breaches do not significantly affect net FPI flows in general, breaches targeting financial institutions, especially banks, can substantially impact FPI inflows. The United Coconut Planters Bank (UCPB) breach notably demonstrated positively significant effects on inflows, highlighting financial institutions’ critical role in transmitting cybersecurity impacts and emphasizing the necessity for robust cybersecurity frameworks in the financial sector.

In addition, real exchange rates consistently emerge as a significant determinant of FPI flows across all the breaches under study. This follows the transaction cost theory that when domestic currency appreciates, the effective costs of acquiring domestic assets increases for foreign investors which reduces the attractiveness of local assets.

Lastly, the nonsignificant findings suggest that FPIs are influenced by various factors beyond this study’s scope. This poses the need for further studies with more comprehensive and granular data sets, specifically in the Philippines, to strengthen the methodology’s explanatory power and yield more robust results.

Language

English

LC Subject

Computer security

Location

UPLB College of Economics and Management (CEM)

Call Number

LG 993.5 2025 E2 B33

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Document Type

Thesis

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