Template-Type: ReDIF-Paper 1.0
Series: Tinbergen Institute Discussion Papers
Creation-Date: 2016-11-17
Number: 16-098/VIII
Author-Name: Steven Poelhekke
Author-Workplace-Name: VU University Amsterdam, The Netherlands
Title: Financial Globalization and Foreign Direct Investment
Abstract: This chapter provides a broad overview of the upward trends in financial globalization and foreign direct investment and asks whether and how financial globalization is linked with the foreign direct investment decisions of non-financial multinational enterprises. Several potential links and their empirical support in the recent literature are discussed: the elements of foreign direct investment that require (global) financial services; the role of trade credit; and the question whether banks follow their customers abroad. Finally, the effect of the recent financial crisis is discussed. It finds that financial globalization provides a reduction in broadly defined transaction costs which can boost both trade and foreign direct investment, at the costs of more exposure of the real economy to financial shocks.
Classification-JEL: F23, F36, F43, O40
Keywords: foreign direct investment, financial globalization, banks
File-Url: https://papers.tinbergen.nl/16098.pdf
File-Format: application/pdf
File-Size: 269578 bytes
Handle: RePEc:tin:wpaper:20160098