Finance-specific factors as drivers of cross-border investment—An empirical investigation

Forssbæck, Jens; Oxelheim, Lars

doi:10.1016/j.ibusrev.2008.09.001

Cited by 48 publications

(38 citation statements)

References 12 publications

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“…First, on the former perspective, the findings are broadly consistent with Ahlin and Pang (2008) who have established a substitution effect: the positive impact of finance on growth decreases with the progress of institutions. Second, the absence of a substantial finance-led-investment nexus is broadly inconsistent with the bulk of existing literature on, inter alia: developing (Ndikumana, 2000(Ndikumana, , 2005Xu, 2000;Huang, 2006); Asian (Rousseau &Vuthipadadorn, 2005); European (Forssbaeck & Oxelheim, 2008) and developed (Love and Zichinno, 2006) countries. To be more specific about sub-Saharan Africa, Misati and Nyamongo (2010) and Afangideh (2010) have also established a positive nexus.…”

Section: Discussion and Policy Implicationsmentioning

confidence: 96%

Bundling Governance: Finance Versus Institutions in Private Investment Promotion

2015

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Purpose -The study extends the debate on finance versus institutions in the promotion of investment documented by Acemoglu and Johnson (2005), Ali (2013) and . We assess the effects of various components of governance on private investment, notably: political, economic and institutional governances. Financial indicators of depth, allocation efficiency, activity and size are used.Design/methodology/approach -An endogeneity robust dynamic system GMM estimation technique is employed. Principal component analysis is also employed to reduce the dimensions of governance variables. The empirical evidence is based on 53 African countries for the period 1996-2010.Findings -The findings provide support for the quality of governance as a better determinant of private investment than financial intermediary development. Moreover, the evidence of finance and governance as substitutes in their impact on investment implies that good governance fuels private investment and this positive impact is stronger in nations with less developed financial systems. This finding is consistent with Ali (2013) and contrary to the results of Asongu (2014c).Practical implication -Policy measures for fighting involuntary and voluntary surplus liquidities are discussed. The paper provides additional support for the need of strengthening governance institutions to promote investment on the one hand and fighting financial allocation inefficiency by mitigating surplus liquidity issues on the other hand.Originality/value -The paper extends the debate on the substitution of finance and institutions in the promotion of private investment.

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Section: Discussion and Policy Implicationsmentioning

confidence: 96%

Bundling Governance: Finance Versus Institutions in Private Investment Promotion

2015

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“…By lowering the discount factor of any investment, such a financial advantage increases the firm's likelihood of engaging in profitable foreign direct invesments (FDIs). Forssbaeck and Oxelheim (2008) brings this argument to the data. As their point of departure, they focus on the ownership-location-internalization (OLI) framework (Dunning, 1993) since, in its ambition of being all inclusive, it provides a list of ''standard'' FDI determinants against which they test against the added explanatory value from including financial factors.…”

Section: Finance-specific Advantages and Foreign Investmentmentioning

confidence: 95%

What Can International Finance Add to International Strategy?

2011

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may AbstractThis chapter focuses on the role of corporate financial strategies to improve firms' market valuations, and thus lower their cost of capital. The identification of successful strategies is accomplished within an overall strategic framework and related to how the firm perceives the degree of international financial integration. Five strategies for how to break out of a segmented, thin domestic capital market are highlighted together with historical success cases.The chapter illustrates the linkages between business strategy, firm motivation, and various financial strategies.JEL: F21, F23, F36, G32, G34.

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“…It is argued that a lower interest rate in a home country can reduce the cost of financing and increase cash financed acquisition activities (Yagil, 1996). Tolentino (2010); Forssbaeck and Oxelheim (2008); Uddin and Boateng (2011) concur and point out that lower interest rate results in capital abundance in home country which stimulates outward investments across different countries to help local firms diversify, reduce risks and increase the level of profitability. In the context of China, there have been periods of low interest rate ranging from 1.98% to 3.6%.…”

Section: Interest Rate (Intrate)mentioning

confidence: 99%

Explaining the surge in M&A as an entry mode: home country and cultural influences

Boateng

Wang

et al. 2017

IMR

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Finance-specific factors as drivers of cross-border investment—An empirical investigation

Cited by 48 publications

References 12 publications

Bundling Governance: Finance Versus Institutions in Private Investment Promotion

Bundling Governance: Finance Versus Institutions in Private Investment Promotion

What Can International Finance Add to International Strategy?

Explaining the surge in M&A as an entry mode: home country and cultural influences

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