Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/108816
Authors: 
Raff, Horst
Ryan, Michael
Stähler, Frank
Year of Publication: 
2015
Series/Report no.: 
CESifo Working Paper 5260
Abstract: 
We use Japanese microdata to examine how financial market frictions affect foreign direct investment (FDI). The Japanese land price bubble and banking trouble in the late 1980s and early 1990s serve as a quasi natural experiment to identify two possible transmission channels from financial shocks to FDI: (i) a collateral channel, whereby changes in the value of collateral affect investors' ability to borrow; and (ii) a lending channel, whereby changes in bank health affect banks' ability to lend. We find evidence that both transmission channels are statistically significant and economically important.
Subjects: 
foreign direct investment
multinational enterprise
financing
credit rationing
collateral
bank health
Japan
JEL: 
F23
L20
Document Type: 
Working Paper

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