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

Alabi, Amina (2021): The role of financial development on the impact of FDI on economic growth.

Abstract

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.

• Item Type: MPRA Paper
• Language: English
• Keywords: Keywords: Mergers and Acquisitions, origin and destination country, financial system development, negative externalities.
• Subjects: F - International Economics > F2 - International Factor Movements and International Business > F21 - International Investment ; Long-Term Capital Movements; F - International Economics > F2 - International Factor Movements and International Business > F23 - Multinational Firms ; International Business; G - Financial Economics > G2 - Financial Institutions and Services > G20 - General; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O16 - Financial Markets ; Saving and Capital Investment ; Corporate Finance and Governance; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O40 - General

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