The role of financial development on the impact of FDI on economic growth

Amina Alabi

MPRA Paper from University Library of Munich, Germany

Abstract: Abstract. This study analyses the role of financial development on the effect of foreign direct investment on economic growth. Literature on this topic focused on M&A FDI is scarce. Thus, this study contributes to the growing literature by using firm-level data on announced M&A deals for the manufacturing sector in the duration of 2003 – 2006. Results show a complementary relationship between financial system development in origin and destination country with FDI at the intensive and extensive margins. Further, findings show that country-level factors such as easy accessibility to credit information in origin and destination countries attract M&A FDI. Results remain consistent upon analysis with the pooled fixed effects and Heckman selection model.

Keywords: Keywords: Mergers and Acquisitions; origin and destination country; financial system development; negative externalities. (search for similar items in EconPapers)
JEL-codes: F21 F23 G20 O16 O40 (search for similar items in EconPapers)
Date: 2021-12-14
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:125411

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