Do Financing Constraints Impact Outward Foreign Direct Investment? Evidence from India
This study examines the role of financing constraints in explaining outward foreign direct investment (FDI) using unique firm-level panel data on Indian manufacturing during the period 2007–2014. We consider the role of both internal and external finance, and employ instrumental variable probit and...
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| Format: | Article |
| Language: | English |
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World Scientific Publishing
2018-03-01
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| Series: | Asian Development Review |
| Subjects: | |
| Online Access: | https://www.mitpressjournals.org/doi/pdf/10.1162/adev_a_00107 |
| _version_ | 1818739272610480128 |
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| author | Subash Sasidharan M. Padmaja |
| author_facet | Subash Sasidharan M. Padmaja |
| author_sort | Subash Sasidharan |
| collection | DOAJ |
| description | This study examines the role of financing constraints in explaining outward foreign direct investment (FDI) using unique firm-level panel data on Indian manufacturing during the period 2007–2014. We consider the role of both internal and external finance, and employ instrumental variable probit and Tobit models to examine financing constraints in outward FDI decisions and intensity. We find that internal finance impacts the likelihood of outward FDI. Further, using count data models, we examine financing constraints in determining strategies regarding a firm's number of affiliates abroad. Our findings reveal that firms with greater cash flows and liquidity are likely to have more foreign affiliates. |
| first_indexed | 2024-12-18T01:22:12Z |
| format | Article |
| id | doaj.art-08d96dc381e44727b2352539b86bbd39 |
| institution | Directory Open Access Journal |
| issn | 0116-1105 1996-7241 |
| language | English |
| last_indexed | 2024-12-18T01:22:12Z |
| publishDate | 2018-03-01 |
| publisher | World Scientific Publishing |
| record_format | Article |
| series | Asian Development Review |
| spelling | doaj.art-08d96dc381e44727b2352539b86bbd392022-12-21T21:25:47ZengWorld Scientific PublishingAsian Development Review0116-11051996-72412018-03-0135110813210.1162/adev_a_00107adev_a_00107Do Financing Constraints Impact Outward Foreign Direct Investment? Evidence from IndiaSubash Sasidharan0M. Padmaja1Associate Professor, Department of Humanities and Social Sciences, Indian Institute of Technology Madras, India. E-mail: subash@iitm.ac.inResearch Assistant Professor, SRM Institute of Science and Technology, Chennai, India. E-mail: padmaja251988@gmail.comThis study examines the role of financing constraints in explaining outward foreign direct investment (FDI) using unique firm-level panel data on Indian manufacturing during the period 2007–2014. We consider the role of both internal and external finance, and employ instrumental variable probit and Tobit models to examine financing constraints in outward FDI decisions and intensity. We find that internal finance impacts the likelihood of outward FDI. Further, using count data models, we examine financing constraints in determining strategies regarding a firm's number of affiliates abroad. Our findings reveal that firms with greater cash flows and liquidity are likely to have more foreign affiliates.https://www.mitpressjournals.org/doi/pdf/10.1162/adev_a_00107financing constraintsoutward FDItotal factor productivity |
| spellingShingle | Subash Sasidharan M. Padmaja Do Financing Constraints Impact Outward Foreign Direct Investment? Evidence from India Asian Development Review financing constraints outward FDI total factor productivity |
| title | Do Financing Constraints Impact Outward Foreign Direct Investment? Evidence from India |
| title_full | Do Financing Constraints Impact Outward Foreign Direct Investment? Evidence from India |
| title_fullStr | Do Financing Constraints Impact Outward Foreign Direct Investment? Evidence from India |
| title_full_unstemmed | Do Financing Constraints Impact Outward Foreign Direct Investment? Evidence from India |
| title_short | Do Financing Constraints Impact Outward Foreign Direct Investment? Evidence from India |
| title_sort | do financing constraints impact outward foreign direct investment evidence from india |
| topic | financing constraints outward FDI total factor productivity |
| url | https://www.mitpressjournals.org/doi/pdf/10.1162/adev_a_00107 |
| work_keys_str_mv | AT subashsasidharan dofinancingconstraintsimpactoutwardforeigndirectinvestmentevidencefromindia AT mpadmaja dofinancingconstraintsimpactoutwardforeigndirectinvestmentevidencefromindia |