Foreign bank entry and the outward foreign direct investment of companies: evidence from China

• 成果类型: Article
• 署名作者: Liu, Haiyue; Yi, Zhimin; Shang, Hua; Liu, Zihan
• 署名单位: Sichuan University; Southwestern University of Finance & Economics - China
• 刊物名称: JOURNAL OF INTERNATIONAL BUSINESS STUDIES
• ISSN/ISSBN: 0047-2506
• DOI: 10.1057/s41267-024-00693-8
• 发表日期: 2024
• 页码: 896-913
• 关键词: Foreign bank entry; outward foreign direct investment; information intermediary; BANK COMPETITION; emerging market firms; DiD method

摘要

Globalization is motivating many emerging market firms (EMFs) to expand operations through outward foreign direct investment (OFDI). General FDI theories, such as internalization theory and the OLI paradigm, are based on industrialized countries, leading to inevitable gaps in explaining the OFDI activities of EMFs. We extend the literature by establishing a connection between international finance and the internationalization of EMFs. We argue that foreign banks operating in emerging markets offer a diverse set of resources that can help EMFs expand globally. Under gradually easing foreign bank entry restrictions in China, utilizing a panel dataset of Chinese listed companies spanning 2001-2018, we find a positive association between foreign bank entry and the OFDI activities of Chinese companies. The identified channels include direct loan support from foreign banks, information support from foreign banks' global branch networks, a high level of internationalization, and close proximity to local companies, as well as loan support from domestic banks under foreign bank competition. The entry of foreign banks particularly stimulates OFDI in non-state-owned, higher profitability companies, in medium-sized, low financial marketization, and node cities designated in the Belt and Road Initiative. These findings provide new insights into emerging market financial openness and the internationalization of EMFs. In a world where businesses are progressively expanding beyond their boundaries, understanding the elements that motivate companies to invest overseas is essential. One aspect that has not been deeply investigated is the connection between the existence of foreign banks and the international investments of companies, especially in developing markets. This study investigates how the internationalization of banks can affect the outward foreign direct investment (OFDI is a business strategy where a domestic firm expands its operations to a foreign country either via a Greenfield investment, merger/acquisition and/or expansion of an existing foreign facility) of domestic companies. The research concentrates on China as an example, studying the period after China's admission into the World Trade Organization in 2001, which resulted in a surge of foreign banks. The study employs a difference-in-differences methodology (a statistical technique used in econometrics to measure the effect of a specific intervention or treatment), comparing the OFDI activities of Chinese firms before and after foreign banks entered their cities. The dataset comprises information on the entry of foreign bank institutions into China from 2001 to 2018 and their impact on Chinese OFDI. The study reveals that the entry of foreign banks into Chinese cities positively affects the OFDI of Chinese firms. This influence happens through three primary channels: foreign bank loans, which provide extra capital for international investments; information intermediary functions, where foreign banks offer valuable insights into overseas markets; and increased competition, which encourages domestic banks to enhance their services and offer more support for OFDI. In conclusion, the presence of foreign banks appears to assist domestic companies in developing markets like China to grow internationally by providing financial support and reducing information barriers. This research suggests that policymakers should consider attracting foreign banks with robust international networks to support domestic firms' global aspirations. The findings also imply that companies looking to invest overseas could benefit from building relationships with foreign banks that have a presence in their target investment destinations. La mondialisation incite de nombreuses entreprises des marches emergents (Emerging Market Firms - EMFs) a developper leurs operations grace aux IDE sortants (Outward Foreign Direct Investment - OFDI). Les theories generales des investissements directs a l'etranger, telles que la theorie de l'internalisation et le paradigme OLI, sont basees sur les pays industrialises, ce qui entraine d'inevitables lacunes dans l'explication des activites d'OFDI des EMFs. Nous elargissons la litterature en etablissant un lien entre la finance internationale et l'internationalisation de ces dernieres. Nous argumentons que les banques etrangeres operant sur les marches emergents offrent un ensemble diversifie de ressources qui peuvent aider les EMFs a se developper a l'echelle mondiale. Dans le cadre de l'assouplissement progressif des restrictions a l'entree des banques etrangeres en Chine, nous trouvons une association positive entre l'entree des banques etrangeres et les activites d'OFDI des entreprises chinoises, en utilisant un ensemble de donnees de panel de celles-ci cotees en bourse entre 2001 et 2018. Les canaux identifies comprennent le soutien direct des banques etrangeres en matiere de prets, le soutien en matiere d'information provenant des reseaux mondiaux de filiales des banques etrangeres, le degre eleve d'internationalisation et la proximite etroite avec des entreprises locales, ainsi que le soutien des banques domestiques en matiere de prets dans le cadre de la concurrence des banques etrangeres. L'entree de ces dernieres stimule particulierement les OFDI dans les entreprises non publiques, a plus forte rentabilite, dans les villes de taille moyenne, a faible commercialisation financiere, et dans les villes-n oe uds designees dans le cadre de l'initiative Belt & Road. Ces resultats apportent de nouveaux renseignements sur l'ouverture financiere des marches emergents et l'internationalisation des EMFs. La globalizacion esta provocando que muchas empresas de mercados emergentes expandan sus operaciones mediante la salida de inversion extranjera directa (OFDI por sus iniciales en ingles). Las teorias generales de inversion extranjera directa, como la teoria de internacionalizacion, o el paradigma de propiedad, localizacion e internalizacion (OLI por sus iniciales en ingles), estan centradas en paises industrializados, llevando a brechas innegables al explicar las actividades de inversion extranjera directa saliente de las empresas de mercados emergentes. Ampliamos la literatura al establecer una conexion entre las finanzas internacionales y la internacionalizacion de las empresas de mercados emergentes. Sostenemos que los bancos extranjeros que operan en mercados emergentes ofrecen una serie de recursos diversos que pueden ayudar a las empresas de mercados emergentes a expandirse globalmente. Con la reduccion de restricciones de entrada en China a bancos extranjeros, y usando una base datos panel de las empresas chinas listadas en bolsa que abarca entre el 2001 al 2018, encontramos una asociacion positiva entre las entradas de los bancos extranjeros y las actividades de inversion extranjera saliente de las companias chinas. Los canales identificados incluyen apoyo para prestamos directos de los bancos extranjeros, la informacion suministrada por las redes de bancos extranjeros de sus sucursales globales, un grado mayor de internacionalizacion, y una proximidad mayor a las empresas locales, tambien el apoyo a prestamos en bancos locales en el marco de la competencia con bancos extranjeros. La entrada de bancos extranjeros estimula especialmente la salida de la inversion extranjera en las empresas que no son de propiedad estatal, en las empresas mas rentables, en empresas medianas y de bajo mercado financiero y las ciudades nodo designadas en la iniciativa de la iniciativa de la Franja y de la Ruta. Estos hallazgos dan nuevos aportes sobre la apertura financiera de los mercados emergentes y la internacionalizacion de las empresas de mercados emergentes. A globalizacao esta motivando muitas empresas de mercados emergentes (EMFs) a expandirem suas operacoes por meio do investimento direto estrangeiro (OFDI). Teorias gerais sobre FDI, como a teoria da internalizacao e o paradigma OLI, baseiam-se em paises industrializados, conduzindo a inevitaveis lacunas na explicacao de atividades de OFDI de EMFs. Ampliamos a literatura estabelecendo uma conexao entre financas internacionais e a internacionalizacao de EMFs. Argumentamos que bancos estrangeiros que operam em mercados emergentes oferecem um conjunto diversificado de recursos que podem ajudar EMFs expandirem-se globalmente. Sob a gradual flexibilizacao de restricoes a entrada de bancos estrangeiros na China, utilizando um conjunto de dados em painel de empresas chinesas listadas abrangendo 2001 a 2018, encontramos uma associacao positiva entre a entrada de bancos estrangeiros e as atividades de OFDI de empresas chinesas. Os canais identificados incluem apoio direto a emprestimos de bancos estrangeiros, suporte com informacoes sobre redes globais de sucursais de bancos estrangeiros, elevado nivel de internacionalizacao e maior proximidade com empresas locais, bem como apoio a emprestimos de bancos nacionais sob concorrencia de bancos estrangeiros. A entrada de bancos estrangeiros estimula particularmente OFDI em empresas nao estatais de maior rentabilidade, em cidades medias e de baixa comercializacao financeira e em cidades no designadas na Iniciativa Belt and Road. Estas conclusoes fornecem novos insights sobre a abertura financeira de mercados emergentes e a internacionalizacao de EMFs. 兴 (EMF) (OFDI) 扩.FDI, OLI, , EMFOFDI.EMF 扩., 兴银EMF 扩.逐银限, 20012018 板, 银OFDI.渠银贷款,银,,靠, 银银贷款.银刺,,,节OFDI.兴EMF 洞.