 Winners and losers from financial sector openness: A Firm’s international exposure mattersHaoyuan Ding, Yuying Jin, Zeyang Jin and Guangyu Nie Research in International Business and Finance, 2024, vol. 70, issue PA Abstract: We study the effects of financial sector openness on domestic firms. To do so, we explore a policy experiment following the announcement of a broad financial sector liberalization in China. We find that this event has heterogeneous stock-market effects on domestic firms. We use foreign ownership, overseas M&As and exports as proxy variables for international exposure, and find that firms with international exposure experience lower returns than the others. In addition, this negative influence of international exposure is weaker if the firm is state-owned, large, or located in a province with relatively high institution quality. We provide a stylized model that rationalizes these results, which shows that after the financial sector opens up, firms with international exposure lose their advantage in obtaining cheap credit, and face fiercer competition than before. Our findings shed novel light on the channels through which financial sector openness affect firms in developing countries. Keywords: Financial sector openness; Institutional quality; International exposure; China (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:70:y:2024:i:pa:s0275531924001508 DOI: 10.1016/j.ribaf.2024.102357 Access Statistics for this article Research in International Business and Finance is currently edited by T. Lagoarde Segot More articles in Research in International Business and Finance from Elsevier |
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