Studies of International Finance, 2019, Issue 9

Authors: Lv Yue, Deng Lijing

Abstract: Based on the data of overseas branches of Chinese banks from 2003 to 2017, this paper empirically studies how the financial development of home country promotes the outward foreign direct investment （OFDI） of local enterprises and its internal influence mechanism. We find that the more branches Chinese banks set up overseas, the more favorable it is for Chinese companies to invest directly in foreign direct investment. Further, we find that Chinese financial institutions going out will promote OFDI by promoting exports and expanding market size. At the same time, this promotion effect is Heterogeneous. From the perspective of the target countries, the driving effect of Chinese banks going global on OFDI in developing countries and countries along the Belt and Road Initiative is particularly prominent. Considering the time range, the investment driving effect of Chinese banks going global after the financial crisis has been weakened by the negative impact of increased global financial risks.

Keywords: Financial Development; OFDI; Finance Serving Real Economy; The Globalization of Chinese Bank