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Unbalanced credit distribution in emerging economies and FDI

Author

Listed:
  • Damien Cubizol

    (Université de Lyon, F-69007, France; CNRS, GATE Lyon St Etienne, 93, Chemin des Mouilles, F-69130, Ecully, France; Université Lyon 2, Lyon, F-69007, France)

Abstract
This empirical study shows that an increasing credit distribution to State-Owned Enterprises (SOEs), to the detriment of private firms, slows the increase in inward FDI in emerging economies. The first approach is global and dynamic; it relies on GMM and Bayesian techniques, utilizing a sample of 40 emerging countries over the period 1988-2008. Then, a sectoral approach is implemented for 1992-2012 and strengthens the negative effect on inward FDI (but the difference of financial dependence between sectors does not have clear effects). Finally, certain policy actions can improve the allocation of domestic and foreign capital in emerging economies.

Suggested Citation

  • Damien Cubizol, 2015. "Unbalanced credit distribution in emerging economies and FDI," Working Papers 1532, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    • Handle: RePEc:gat:wpaper:1532
    as

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    File URL: ftp://ftp.gate.cnrs.fr/RePEc/2015/1532.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Financial intermediation; Foreign Direct Investment; emerging economies; privatization;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • L30 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - General
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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