Unbalanced credit distribution in emerging economies and FDI

Damien Cubizol ()
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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

No 1532, Working Papers from Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon

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.

Keywords: Financial intermediation; Foreign Direct Investment; emerging economies; privatization (search for similar items in EconPapers)
JEL-codes: F21 G20 L30 O10 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-mac and nep-tra
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Persistent link: https://EconPapers.repec.org/RePEc:gat:wpaper:1532

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