Publication: Credit Conditions and Foreign Direct Investment During the Global Financial Crisis
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Date
2014-10
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2014-10
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This paper investigates the effect that tight credit conditions had on outward foreign direct investment flows during the 2008-2010 global financial crisis. A difference-in-differences approach is used to isolate a "credit channel" impact of the global financial crisis on foreign direct investment. The global financial crisis had a stronger negative impact on the relative volume of outward foreign direct investment in financially vulnerable sectors in more financially developed countries, especially if these countries also experienced a banking crisis. These results suggest that lack of access to external finance can partly explain the drop in foreign direct investment during the global financial crisis.
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“Desbordes, Rodolphe; Wei, Shang-Jin. 2014. Credit Conditions and Foreign Direct Investment During the Global Financial Crisis. Policy Research Working Paper;No. 7063. © http://hdl.handle.net/10986/20502 License: CC BY 3.0 IGO.”
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