2022 Fiscal Year Annual Research Report
Does Banking FDI Promote Firm FDI?
| Project/Area Number |
21K20161
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| Research Institution | Waseda University |
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Principal Investigator |
菊地 朋生 早稲田大学, 国際学術院(アジア太平洋研究科), 准教授 (60906527)
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| Project Period (FY) |
2021-08-30 – 2023-03-31
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| Keywords | Multinationals / Chinese banking FDI / Manufacturing FDI / Credit constraints |
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| Outline of Annual Research Achievements |
We investigate the relationship between bank FDI and manufacturing firm FDI using a detailed firm-level dataset on outbound multinational activity from China that was contemporaneous with the global expansion of China's Big-5 banks. Adopting an event study approach that exploits information on years of entry across potential host countries, we find that the establishment of a Big-5 bank subsidiary or branch is associated with a significant increase in subsequent years in Chinese firms'likelihood to establish an overseas subsidiary in that host country. We present tests - including an instrumental variables strategy - that build a case that the relationship from China's bank FDI to firm FDI is causal in nature.
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