Influence of the Level of Financial Development on OFDI in China

Abstract

Outward Foreign Direct Investment (OFDI) is influenced by many factors. In these factors, the impact of the financial development of the investing country is very important and obvious. An important support for an enterprise to make OFDI is to get a sufficient source of funding, and the source of funding depends on the degree of development of domestic financial market. From the early research, we can find that OFDI in developing countries, at least to some extent, is the result of economic structural improvements and financial innovations. Taking China as an example, this paper studies the role of developing countries in the level of financial development in OFDI. By using the panel data of 30 provinces and autonomous regions in China during the five-year period from 2010 to 2014, we want to examine the development of financial markets in various regions impact on China’s outward foreign direct investment.