Relative Access to Credit, Relative Wealth and FDI: Firm-Level Evidence from Japanese FDI into the United States
AbstractWe use data on 317 Japanese firms to examine the effect of relative access to credit and relative wealth on the Japanese firm’s rate of foreign direct investment (FDI) in the United States. Using the zero-inflated negative binomial model, we find that multiple rating downgrades of a firm’s main bank significantly affected the Japanese firm’s rate of FDI in the United States. This result holds for firms with the highest 20% of bonds-to-liabilities ratio indicating that banking problems in Japan affected even firms who could have financed their FDI with bonds. We also find that the firm’s rate of FDI is affected by the firm’s relative wealth.
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Bibliographic InfoArticle provided by Center for Economic Integration, Sejong University in its journal Journal of Economic Integration.
Volume (Year): 22 (2007)
Issue (Month): ()
Relative access to credit; Relative wealth; Exchange rate; *;
Find related papers by JEL classification:
- C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
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- Alba, Joseph D. & Park, Donghyun & Wang, Peiming, 2009. "Corporate Governance and Merger and Acquisition Foreign Direct Investment: Firm-level Evidence from Japanese Foreign Direct Investment into the US," ADB Economics Working Paper Series 147, Asian Development Bank.
- Ho, Woon-Yee & Wang, Peiming & Alba, Joseph D., 2009. "Merger and acquisition FDI, relative wealth and relative access to bank credit: Evidence from a bivariate zero-inflated count model," International Review of Economics & Finance, Elsevier, vol. 18(1), pages 26-30, January.
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