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Does Financial Reform Promote the Inflow of FDI? Evidence from China's Panel Data

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  • Qichun He
  • Meng Sun

Abstract

This paper empirically tests whether the host country's financial reform promotes the inflow of foreign direct investment (FDI). We test the hypothesis on the reform period Chinese provincial yearly panel data. The system generalized method of moments (GMM) estimation shows that the effect of financial reform on inward FDI to GDP ratios is not statistically significant after controlling for other variables and time and province effects. Consistent with the previous studies, market size and openness to international trade have significant effects on the FDI/GDP ratio in both Least squares dummy variables and system GMM estimations.

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  • Qichun He & Meng Sun, 2013. "Does Financial Reform Promote the Inflow of FDI? Evidence from China's Panel Data," Global Economic Review, Taylor & Francis Journals, vol. 42(1), pages 15-28, March.
    • Handle: RePEc:taf:glecrv:v:42:y:2013:i:1:p:15-28
    DOI: 10.1080/1226508X.2013.769800
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    Cited by:

    1. Liu, Haiyun & Islam, Mollah Aminul & Khan, Muhammad Asif & Hossain, Md Ismail & Pervaiz, Khansa, 2020. "Does financial deepening attract foreign direct investment? Fresh evidence from panel threshold analysis," Research in International Business and Finance, Elsevier, vol. 53(C).
    2. Sanjoy Kumar Saha, 2022. "How Does the Impact of Foreign Direct Investment on Labor Productivity Affects Productive Capacity?," International Journal of Finance, Insurance and Risk Management, International Journal of Finance, Insurance and Risk Management, vol. 12(4), pages 101-135.
    3. Sanjoy Kumar Saha, 2024. "Does the Impact of the Foreign Direct Investment on Labor Productivity Change Depending on Productive Capacity?," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(2), pages 8588-8620, June.
    4. He, Qichun & Sun, Meng, 2014. "Does fiscal decentralization promote the inflow of FDI in China?," Economic Modelling, Elsevier, vol. 43(C), pages 361-371.

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