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Frontiers of Economics in China

Front Econ Chin    2011, Vol. 6 Issue (1) : 55-75
Capital Endowment, Credit Constraint and FDI: Analysis Based on Heterogeneous Firms
Junjiang Li1(), Lei Hou2(), Jiarui Zhang3()
1. School of Economics, Jilin University, Changchun 130012, China; 2. School of Economics, Jilin University, Changchun 130012, China; 3. Department of Economics, University of Munich, Munich 80539, Germany
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To examine the impact of capital endowment and credit constraint on firms’ FDI decisions, we build a model of investment portfolio based on heterogeneous firms setup. We find that financial factors matter for firms’ internationalization. More capital endowment or less credit constraint lowers cutoff productivity for firms to do FDI.

Keywords capital endowment      credit constraint      FDI      heterogeneous firms      productivity     
Corresponding Author(s): Junjiang Li,; Lei Hou,; Jiarui Zhang,   
Issue Date: 05 March 2011
 Cite this article:   
Lei Hou,Jiarui Zhang,Junjiang Li. Capital Endowment, Credit Constraint and FDI: Analysis Based on Heterogeneous Firms[J]. Front Econ Chin, 2011, 6(1): 55-75.
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