Economics at your fingertips  

The impact of banking deregulation on inbound foreign direct investment: Transaction-level evidence from the United States

Ivan Kandilov, Asli Leblebicioglu () and Neviana Petkova

Journal of International Economics, 2016, vol. 100, issue C, 138-159

Abstract: We evaluate the effects of state-level banking deregulation that resulted in improved access to cheaper local finance on foreign firms investing in the U.S. We provide direct, micro-level evidence from U.S. inbound foreign direct investment transactions showing that interstate banking, but not intrastate branching, deregulation increased the number of transactions, reduced the average transaction value, and boosted overall investment by foreign multinationals. We also show that lower cost of local credit and greater local bank competition in each state, following the interstate banking deregulation, are potential mechanisms that stimulated FDI activity. Finally, we demonstrate that after the adoption of the interstate banking deregulation, both the number and the average value of transactions increased in industries that are more dependent on external finance relative to industries that are less dependent.

Keywords: Foreign direct investment; Banking deregulation; External finance dependence (search for similar items in EconPapers)
JEL-codes: F21 F23 F36 G21 G28 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8) Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

DOI: 10.1016/j.jinteco.2016.02.008

Access Statistics for this article

Journal of International Economics is currently edited by Gourinchas, Pierre-Olivier and Rodríguez-Clare, Andrés

More articles in Journal of International Economics from Elsevier
Bibliographic data for series maintained by Nithya Sathishkumar ().

Page updated 2021-03-28
Handle: RePEc:eee:inecon:v:100:y:2016:i:c:p:138-159