The importance of foreign direct investment (FDI) in the development process of an economy is well established. Many developing countries have constantly strived to improve their performance in terms of market size, infrastructure and the quality of its institutions as the amount of FDI inflows to a country are positively influenced by these factors. The South Asian countries have seen a healthy economic growth and taken steps to improve the quality of institutions and law and order in the country to attract a larger share of global FDI flows. The objective of the present study is to examine the independent and combined effect of market size and quality of institutions on FDI inflows in the South Asian countries for the period 2007-2020. Using pooled OLS regression method, we find that FDI inflows are higher when country experiences increase in market size along with improvement in the quality of institutions. Our results suggest a complementary relationship between traditional economic factors and institutional factors.