Journal article
Financial factors in foreign direct investments: A dynamic analysis of international data
Research in international business and finance, v 21(1), pp 1-18
2007
Featured in Collection : UN Sustainable Development Goals @ Drexel
Abstract
In contrast to existing empirical foreign direct investment (FDI) studies that examine the static effects of strategic or real economic variables, this paper focuses on the impacts of financial variables on FDI outflows for four largest industrial countries using dynamic time series methods. The results show that FDI outflows are non-stationary but have a long-run cointegrating relationship with real exchange rates. In addition, there are causal effects of exchange rates on direct investments in the short run. Multivariate cointegration analysis shows the significance of financial channels such as cost of capital and real wealth through which the real exchange rate effects operate. The effects of financial channels are comparable to those of the real wage rate channel. Overall, the present paper provides significant and methodologically consistent international evidence for dynamic interactions between FDIs and financial variables.
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Details
- Title
- Financial factors in foreign direct investments: A dynamic analysis of international data
- Creators
- Jongmoo Jay Choi - Temple UniversityBang Nam Jeon - Drexel University
- Publication Details
- Research in international business and finance, v 21(1), pp 1-18
- Publisher
- Elsevier
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Economics (School of Economics)
- Web of Science ID
- WOS:000213187500001
- Scopus ID
- 2-s2.0-33751081584
- Other Identifier
- 991019330806504721
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- Collaboration types
- Domestic collaboration
- Web of Science research areas
- Business, Finance