Unbalanced credit distribution in emerging economies and FDI

Damien Cubizol (1)

1 GATE Lyon Saint-Étienne - Groupe d'Analyse et de Théorie Economique Lyon - Saint-Etienne

This empirical study shows that an increasing credit distribution to State-Owned Enterprises (SOEs), to the detriment of private firms, slows the increase in inward FDI in emerging economies. The first approach is global and dynamic; it relies on GMM and Bayesian techniques, utilizing a sample of 40 emerging countries over the period 1988-2008. Then, a sectoral approach is implemented for 1992-2012 and strengthens the negative effect on inward FDI (but the difference of financial dependence between sectors does not have clear effects). Finally, certain policy actions can improve the allocation of domestic and foreign capital in emerging economies.

Mots clés: Financial intermediation; Foreign Direct Investment; emerging economies; privatization

Domaines: Economies et finances

Damien Cubizol. Unbalanced credit distribution in emerging economies and FDI. 2015. ⟨halshs-01241147v2⟩