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Capital Endowment, Credit Constraint and FDI: Analysis Based on Heterogeneous Firms

Author

Listed:
  • Junjiang Li

    (School of Economics, Jilin University, Changchun 130012, China)

  • Lei Hou

    (School of Economics, Jilin University, Changchun 130012, China)

  • Jiarui Zhang

    (Department of Economics, University of Munich, Munich 80539, Germany)

Abstract

To examine the impact of capital endowment and credit constraint on firms¡¯ FDI decisions, we build a model of investment portfolio based on heterogeneous firms setup. We find that financial factors matter for firms¡¯ internationalization. More capital endowment or less credit constraint lowers cutoff productivity for firms to do FDI.

Suggested Citation

  • Junjiang Li & Lei Hou & Jiarui Zhang, 2011. "Capital Endowment, Credit Constraint and FDI: Analysis Based on Heterogeneous Firms," Frontiers of Economics in China-Selected Publications from Chinese Universities, Higher Education Press, vol. 6(1), pages 55-75, March.
    • Handle: RePEc:fec:journl:v:6:y:2011:i:1:p:55-75
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    File URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-011-0122-8
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    Citations

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    Cited by:

    1. Michał Brzozowski, 2013. "Gender Equality as the Determinant of FDI Flows to Central European Countries," Ekonomia journal, Faculty of Economic Sciences, University of Warsaw, vol. 33.
    2. Lin Yuan & Xiaolin Qian & Nitin Pangarkar, 2016. "Market Timing and Internationalization Decisions: A Contingency Perspective," Journal of Management Studies, Wiley Blackwell, vol. 53(4), pages 497-519, June.

    More about this item

    Keywords

    capital endowment; credit constraint; FDI; heterogeneous firms; productivity;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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