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Surviving the global financial crisis : foreign ownership and establishment performance

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  • Alfaro, Laura
  • Chen, Maggie Xiaoyang

Abstract

This paper examines how different establishments performed during the recent global financial crisis, focusing on the role of foreign ownership. The paper investigates how foreign ownership affected establishments'responses to negative economic shocks, using a cross-country panel dataset with detailed information on operation, location and industry for more than 12 million establishments from 2005-2008. The evidence shows that multinational subsidiaries on average fared better than local counterfactuals with similar economic characteristics. Among multinational subsidiaries, establishments with stronger production and financial linkages with parent companies showed greater resilience. Finally, in contrast to the crisis period, the impact of foreign ownership and linkages on an establishment's performance was insignificant in non-crisis years.

Suggested Citation

  • Alfaro, Laura & Chen, Maggie Xiaoyang, 2012. "Surviving the global financial crisis : foreign ownership and establishment performance," Policy Research Working Paper Series 5946, The World Bank.
    • Handle: RePEc:wbk:wbrwps:5946
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    More about this item

    Keywords

    Economic Theory&Research; Investment and Investment Climate; Bankruptcy and Resolution of Financial Distress; Emerging Markets; Economic Conditions and Volatility;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • G01 - Financial Economics - - General - - - Financial Crises
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • M16 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - International Business Administration

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