OUTWARD FOREIGN DIRECT INVESTMENT OF CHINA’S BANKING SECTOR: DETERMINANTS AND MOTIVATIONS

Yuhua Zhao (), Nilufer Ozdemir (), Ren Zhang () and Lian An
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Yuhua Zhao: School of Economics, Beijing International Studies University, Beijing 100024, P. R. China
Nilufer Ozdemir: ��Department of Economics and Geography, Coggin College of Business, University of North Florida, Jacksonville, Florida 32224, USA
Ren Zhang: ��Department of Finance and Economics, McCoy College of Business, Texas State University, San Marcos, Texas 78666, USA
Lian An: ��Department of Economics and Geography, Coggin College of Business, University of North Florida, Jacksonville, Florida 32224, USA

The Singapore Economic Review (SER), 2022, vol. 67, issue 02, 685-707

Abstract: The outward foreign direct investment (OFDI) is vital for the sustainable development of China’s banking sector. This paper examines the location determinants of OFDI by China’s banks during 2003–2015 with a set of negative binomial panel regression models. We show that the OFDI for China’s banking sector generally exhibits market-seeking, resource-seeking and efficiency-seeking motivations. The efficiency-seeking motivation is mostly through the incentive to avert credit risk. The OFDI also tends to flow to economically stable countries. Our results indicate that the Chinese banks’ investment decisions are mainly in line with fundamental theories and are robust for different samples and periods.

Keywords: China; banking sector; outward FDI; location determinants (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1142/S0217590821500594

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