Global Capital Flows and Financing Constraints

Harrison, Ann E. ; Love, Inessa ; McMillan, Margaret S.

World Bank, Washington, DC

关键词: ASSETS;    ASYMMETRIC INFORMATION;    BALANCE OF PAYMENTS;    BANK LOANS;    CAPITAL ACCUMULATION;   

DOI  :  10.1596/1813-9450-2782
RP-ID  :  WPS2782

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

Firms often cite financing constraintsas one of their primary obstacles to investment. Globalcapital flows, by bringing in scarce capital, may ease thefinancing constraints of host country firms. But if incomingforeign investors borrow heavily from domestic banks,foreign direct investment may exacerbate financingconstraints by crowding host country firms out of domesticcapital markets. Combining a unique cross-country firm-levelpanel with time-series data on restrictions on internationaltransactions and capital flows, Harrison, Love, and McMillanfind that different measures of global flows are associatedwith a reduction in firm-level financing constraints. First,the authors show that one type of capital inflow-foreigndirect investment-is associated with a reduction infinancing constraints. Second, they test whetherrestrictions on international transactions affects thefinancing constraints of firms. The results suggest thatonly one type of restriction-those on capital accounttransactions-negatively affects firms' financingconstraints. The authors also show that multinational firmsare not financially constrained and do not appear to besensitive to the level of foreign direct investment. Thisimplies that foreign direct investment eases financingconstraints for non-multinational firms. Finally, theauthors show that (1) foreign direct investment only easesfinancing constraints in the non-G7 countries, and (2) otherkinds of flows, such as portfolio investment, have no impacton financing constraints.