Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/175833 
Year of Publication: 
2018
Series/Report no.: 
KCG Working Paper No. 10
Publisher: 
Kiel Centre for Globalization (KCG), Kiel
Abstract: 
Using Japanese microdata for the period 1980 to 2000 we find evidence for two transmission channels from financial shocks to foreign direct investment: a collateral channel, whereby changes in the value of investors' landholdings affect their borrowing ability; and a lending channel, whereby changes in bank health affect banks' lending ability. Decreasing land values by 55% on average from their peak in 1990 to the sample mean reduces the predicted number of investments by 17%. Reducing banks' market-to-book ratios by an average 61% from their high in 1986 to the sample mean lowers predicted investment counts by 21%.
Subjects: 
Foreign direct investment
multinational enterprise
credit rationing
collateral
bank health
Japan
JEL: 
F23
L20
Document Type: 
Working Paper

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