Relationship between Financial Development and Foreign Direct Investment

Hnin Htet Htet Win

Ichihashi Masaru

Kaneko Shinji

Goto Daisaku

IDEC DP2 Series

This study examines the relationship between foreign direct investment (FDI) and financial development (FD) based on a sample of 93 countries including high-income, upper middle-income and low-income countries. The estimation results for the entire sample indicate that FDI is beneficial instrument to enhance the speed of FD. The empirical results for the high-income countries indicate that FDI stimulates only the loan sector and does not have a significant effect on domestic credit for the private sector. The empirical results for upper middle-income countries show that FDI can speed up the FD of upper middle-income countries. Finally, the results for low-income countries indicate that the effects of both FDI on both the domestic credit sector and domestic credit for private financial sector of FD are unclear and inconsistent.

Financial Development

Foreign Direct Investment

Domestic Investment

Arellano Bond (1991)

Dynamic Panel GMM Estimation

経済 [ 330 ]

英語

広島大学大学院国際協力研究科