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

Rodolphe Desbordes, Shang-Jin Wei

Research output: Contribution to journalArticle

3 Citations (Scopus)
13 Downloads (Pure)

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.
Original languageEnglish
JournalScandinavian Journal of Economics
DOIs
Publication statusAccepted/In press - 9 Dec 2015

Keywords

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

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