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Domestic bank health and foreign direct investment

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  • Ushijima, Tatsuo

Abstract

This article provides evidence on the link between Japanese firms' foreign direct investment (FDI) and domestic bank health during the 1990s. Analysis of FDI by 420 industrial firms reveals that financial health of a firm's main bank and non-main banks both positively and significantly relates to the firm's FDI around the globe. The estimated impact of main bank health is smaller than that of non-main banks' financial health, suggesting that close bank-firm ties cushion the impact of bank health deteriorations albeit partially. Regressions also reveal that the sensitivity to domestic bank health varies across firms and investments projects. The variation patterns are consistent with the view that bank health affects FDI by changing the availability of bank credit. J. Japanese Int. Economies 22 (3) (2008) 291-309.

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  • Ushijima, Tatsuo, 2008. "Domestic bank health and foreign direct investment," Journal of the Japanese and International Economies, Elsevier, vol. 22(3), pages 291-309, September.
    • Handle: RePEc:eee:jjieco:v:22:y:2008:i:3:p:291-309
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    2. Agbloyor, Elikplimi Komla & Abor, Joshua & Adjasi, Charles Komla Delali & Yawson, Alfred, 2013. "Exploring the causality links between financial markets and foreign direct investment in Africa," Research in International Business and Finance, Elsevier, vol. 28(C), pages 118-134.
    3. Savoiu, Gheorghe & Dinu, Vasile & Ciuca, Suzana, 2013. "Foreign Direct Investment based on Country Risk and other Macroconomic Factors. Econometric Models for Romanian Economy," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(1), pages 39-61, March.
    4. Gheorghe Savoiu & Simina Brostescu, 2017. "Three International Statistical Indicators And Their Factorial Impact On The Modelling Of Foreign Investments In Romania," Romanian Statistical Review Supplement, Romanian Statistical Review, vol. 65(8), pages 174-188, August.
    5. Abildgren, Kim & Vølund Buchholst, Birgitte & Staghøj, Jonas, 2013. "Bank-firm relationships and the survival of non-financial firms during the financial crisis 2008-2009," Working Paper Series 1516, European Central Bank.
    6. Riccardo De Bonis & Giovanni Ferri & Zeno Rotondi, 2015. "Do firm–bank relationships affect firms’ internationalization?," International Economics, CEPII research center, issue 142, pages 60-80.

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