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The role of financial development on the impact of FDI on economic growth

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  • Alabi, Amina

Abstract

. This study analyses the role of financial development on the effect of foreign direct investment on economic growth. Literature on this topic focused on M&A FDI is scarce. Thus, this study contributes to the growing literature by using firm-level data on announced M&A deals for the manufacturing sector in the duration of 2003 – 2006. Results show a complementary relationship between financial system development in origin and destination country with FDI at the intensive and extensive margins. Further, findings show that country-level factors such as easy accessibility to credit information in origin and destination countries attract M&A FDI. Results remain consistent upon analysis with the pooled fixed effects and Heckman selection model.

Suggested Citation

  • Alabi, Amina, 2021. "The role of financial development on the impact of FDI on economic growth," MPRA Paper 125411, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:125411
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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