Capital Endowment, Credit Constraint and FDI: Analysis Based on Heterogeneous Firms

Junjiang Li; Lei Hou; Jiarui Zhang

doi:10.1007/s11459-011-0122-8

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Front. Econ. China ›› 2011, Vol. 6 ›› Issue (1) : 55-75. DOI: 10.1007/s11459-011-0122-8

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Capital Endowment, Credit Constraint and FDI: Analysis Based on Heterogeneous Firms

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Abstract

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.

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capital endowment / credit constraint / FDI / heterogeneous firms / productivity

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Junjiang Li, Lei Hou, Jiarui Zhang. Capital Endowment, Credit Constraint and FDI: Analysis Based on Heterogeneous Firms. Front Econ Chin, 2011, 6(1): 55‒75 https://doi.org/10.1007/s11459-011-0122-8