Does direct foreign investment affect domestic firms" credit constraints?

Does direct foreign investment affect domestic firms" credit constraints? by Ann E. Harrison Download PDF EPUB FB2

Firms in developing countries cite credit constraints as one of their primary obstacles to investment. Direct foreign investment, by bringing in scarce capital, may ease domestic firms' credit. Direct foreign investment may ease credit constraints by bringing in scarce capital.

Alternatively, if foreign firms borrow heavily from domestic banks, they may crowd local firms out of domestic. Downloadable.

Firms in developing countries cite credit constraints as one of their primary obstacles to investment. Direct foreign investment, by bringing in scarce capital, may ease domestic firms' credit constraints. Alternatively, if foreign firms borrow heavily from domestic banks, they may exacerbate domestic firms' credit constraints by crowding them out of domestic capital markets.

Impacts Through this project, I expect the agricultural sector to benefit in the long term from evidence that direct foreign investment either exacerbates or alleviates credit constraints.

Publications. Harrison, A. and McMillan, M., Does Foreign Direct Investment Affect Domestic Firm Credit Constraints. October Get this from a library. Does direct foreign investment affect domestic firms' credit constraints?. [Ann E Harrison; Margaret Stokes McMillan; National Bureau of Economic Research.] -- Abstract: Firms in developing countries cite credit constraints as one of their primary obstacles to investment.

Direct foreign investment, by bringing in scarce capital, may ease domestic firms'. Elisabetta Bertero & Laura Rondi, "INVESTMENT, CASH FLOW AND MANAGERIAL DISCRETION IN STATE-OWNED FIRMS-Evidence across soft and hard budget constraints," CERIS Working PaperInstitute for Economic Research on Firms and Growth - Moncalieri (TO) ITALY -NOW- Research Institute on Sustainable Economic Growth - Moncalieri (TO) ITALY.

Get this from a library. Does direct foreign investment affect domestic firms' credit constraints?. [Ann E Harrison; Margaret Stokes McMillan; National Bureau of Economic Research.]. When large domestic firms no longer have access to cheap credit through political connections, liquidity constraints outweigh firms' preferences to exclude foreigners.

Economic elites then pressure governments to pursue liberal FDI policy environments. Downloadable (with restrictions). This paper finds foreign direct investment (FDI) significantly reduces the investment-cash flow sensitivity of United State firms.

Using both an instrumental variable method and a quasinatural experimental setting, I identify a causal linkage from increased FDI to reduced investment-cash flow by: 2. Downloadable. In this paper, we analyze whether incoming foreign investment in China plays an important role in alleviating domestic firms' credit constraints.

Access to external finance is a crucial determinant of business expansion. Using firm-level data on 2, domestic companies for the periodwe investigate the extent to which firms are fiancially constrained and whether. Several studies indicate that allowing foreign direct investment (FDI) can help domestic firms escape financial constraints by directly providing funds (Harrison et al., ; Héricourt and Poncet, ), bypassing domestic legal barriers (Chen and Luo, ), sharing investment risk (Henry, ) and absorbing financial resources (Chen and Author: Qingbin Meng, Xinyu Li, Kam C.

Chan, Shenghao Gao. Every credit in the balance of payments is matched by a debit somewhere to confirm to the principle of double entry book keeping. A country’s Balance of Payments (BOP) consists of current account, capital account and official settlement account.

The Foreign Direct Investment (FDI) inflows are reported under the capital account of BOP. This paper provides evidence that credit constraints are an important determinant of international trade flows.

I exploit shocks to the availability of external finance and examine the impact of equity market liberalizations on the export behavior of 91 countries in the – by: Our result that credit constraints constitute an important dimension of domestic firms’ absorptive capacity to benefit from spillovers from foreign-owned firms is akin to the finding by Alfaro et al.

() that foreign direct investment plays an important role in contributing to economic growth in countries with more developed financial by: 5.

The enduring risk of conflicts is significant for both actual warfare rather than use of force, and foreign direct investment (FDI) rather than foreign portfolio investment (FPI).Author: Tyson Roberts. Abstract. Foreign direct investment is increasingly becoming an important source of investment funds in developing countries.

Many economists have hailed it as an important source of new technology and management know-how and a useful link to world markets (see, for example, Balasubramanyam, Salisu and Sapsford, ; Fry, ).Cited by: The starting point is a description of recent trends in domestic private investment and foreign direct investment (FDI) in these countries with special focus on Sub-Saharan : Joe Muzurura.

Scholars have suggested that externalities such as technology spillovers to domestic firms from the entry and presence of foreign firms – i.e., Foreign Direct Investment (FDI) spillovers.

This does not hold for foreign firms: in their case, if working capital is high (or positive), investment in fixed capital reacts to cash flow innovations in a similar way to private and collective firms (the cash flow coefficient for high-working capital foreign firms is compared to andrespectively for private and collective Cited by: Wang, Tan, and Yu () use the data of private firms in Zhejiang Province, and find that financing constraints reduce the possibility of firms' foreign direct investment on the one hand, and exert adverse effects on the scale of their investment on the other.

Though the above studies provide new insights into understanding the Chinese firms Cited by: 3. There are three main channels though which such foreign capital may be introduced into the host economy: foreign direct investment (FDI), foreign portfolio investment (FPI), and the issuance of shares by domestic firms on overseas stock : Roger Strange, Jian Chen.Get this from a library!

Merging Interests: When Domestic Firms Shape FDI Policy. [Sarah Bauerle Danzman] -- Demonstrates how large domestic firms push to liberalize foreign direct investment policies to ameliorate financing constraints, often to the detriment of others.Does Direct Foreign Investment Affect Domestic Firms' Credit Constraints?

NBER Working Papers, National Bureau of Economic Research, Inc View citations (36) Ownership versus environment: disentangling the sources of public sector inefficiency Policy Research Working Paper Series, The World Bank View citations (11).