Foreign direct investment and external financing conditions: evidence from normal and crisis times

Rodolphe Desbordes, Shang-Jin Wei

Research output: Contribution to journalArticle

1 Citation (Scopus)

Abstract

This paper investigates the effects that external financing conditions in source and destination countries have on foreign direct investment (FDI) in normal and crisis times, using a difference-in- differences approach. We find that source and destination countries’ financial development have a strong positive impact on the relative volume of FDI in financially vulnerable sectors in normal times. On the other hand, during the 2008-2010 global financial crisis, the relative volume of FDI in financially vulnerable sectors fell relatively more in financially developed source and destination countries, most notably if these countries experienced a credit crisis.
LanguageEnglish
JournalScandinavian Journal of Economics
DOIs
Publication statusAccepted/In press - 9 Dec 2015

Fingerprint

Foreign direct investment
External financing
Destination
Global financial crisis
Credit crisis
Difference-in-differences
Financial development

Keywords

  • banking crisis
  • credit crisis
  • credit constraints
  • financial development
  • global finanical crisis

Cite this

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abstract = "This paper investigates the effects that external financing conditions in source and destination countries have on foreign direct investment (FDI) in normal and crisis times, using a difference-in- differences approach. We find that source and destination countries’ financial development have a strong positive impact on the relative volume of FDI in financially vulnerable sectors in normal times. On the other hand, during the 2008-2010 global financial crisis, the relative volume of FDI in financially vulnerable sectors fell relatively more in financially developed source and destination countries, most notably if these countries experienced a credit crisis.",
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Foreign direct investment and external financing conditions : evidence from normal and crisis times. / Desbordes, Rodolphe; Wei, Shang-Jin.

In: Scandinavian Journal of Economics, 09.12.2015.

Research output: Contribution to journalArticle

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