Domestic bank health and foreign direct investment

Research output: Contribution to journalArticle

3 Citations (Scopus)

Abstract

This article provides evidence on the link between Japanese firms' foreign direct investment (FDI) and domestic bank health during the 1990s. Analysis of FDI by 420 industrial firms reveals that financial health of a firm's main bank and non-main banks both positively and significantly relates to the firm's FDI around the globe. The estimated impact of main bank health is smaller than that of non-main banks' financial health, suggesting that close bank-firm ties cushion the impact of bank health deteriorations albeit partially. Regressions also reveal that the sensitivity to domestic bank health varies across firms and investments projects. The variation patterns are consistent with the view that bank health affects FDI by changing the availability of bank credit. J. Japanese Int. Economies 22 (3) (2008) 291-309.

Original languageEnglish
Pages (from-to)291-309
Number of pages19
JournalJournal of The Japanese and International Economies
Volume22
Issue number3
DOIs
Publication statusPublished - 2008 Sep 1
Externally publishedYes

Keywords

  • Bank health
  • Banking crisis
  • FDI
  • Japan
  • Main bank finance

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics
  • Political Science and International Relations

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