Does Belt and Road Initiative attract Cross-Border M&As from other countries?

Abstract

This article examines how the Belt and Road Initiative (BRI) affects Cross-Border M&As (CMAs) inflows to countries along the Belt and Road routes (BRI countries) from non-BRI countries. We conduct a difference-in-differences estimation with a control group constructed through propensity score matching. We find that the BRI significantly reduces CMAs from non-BRI countries to BRI countries. The results are robust to various concerns and specifications. We uncover two important mechanisms driving the results: the increased CMAs within BRI countries and the potential debt risks. We also find heterogeneous effects across countries.