Exchange rate uncertainty and the timing of Chinese Outward Direct Investment
Hui Liu and
Zhaoyong Zhang ()
International Review of Economics & Finance, 2021, vol. 76, issue C, 1193-1204
This paper investigates the timing of Chinese ODI under exchange rate uncertainty by employing the Cox proportional hazards model. Using matched data this paper finds both exchange rate level and volatility are the important determinants, and RMB depreciation and greater volatility will deter ODI. Such adverse effect is found more striking for non-SOEs, firms in the eastern region, and non-exporting firms. With China’s recent exchange rate formation mechanism reform, the impact of exchange rate uncertainty is expected to be stronger. These findings have important implications for China’s exchange rate regime reform and its “Going Global” strategy.
Keywords: Exchange rate uncertainty; ODI timing; Delayed investment; Survival analysis (search for similar items in EconPapers)
JEL-codes: F23 F31 O53 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:76:y:2021:i:c:p:1193-1204
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