Gravity, counterparties, and foreign investment

• 成果类型: Article
• 署名作者: Badarinza, Cristian; Ramadorai, Tarun; Shimizu, Chihiro
• 署名单位: National University of Singapore; Imperial College London; University of Tokyo; Centre for Economic Policy Research - UK
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2021.09.011
• 发表日期: 2022
• 页码: 132-152
• 关键词: gravity; Foreign investment; Commercial real estate; INVESTMENT FRICTIONS; trust

摘要

We propose a new explanation for the persistence of gravity in international investment flows based on new facts about large cross-border commercial real estate transactions. Buyers in these transactions preferentially match with counterparties from own or proximate countries; such affinity-based matching helps alleviate financial investment frictions. We set up and structurally estimate a model of capital allocation in a decentralized market with an investment friction, which delivers the price, volume, and counterparty matching patterns in the data. The model shows that if clusters of high-affinity counterparties lie along historical routes, as in the data, preferential matching can perpetuate gravity relationships. (C) 2021 Elsevier B.V. All rights reserved.