Multinational banking and economic development: a case study

摘要

Evidence of inward foreign direct investment by commercial banks into two regions of China is used to examine the effect or relaxation of controls over inward investment on investment by nonfinancial firms. The existence of sophisticated intermediaries with experience in the international financial system creates conditions for a verifiable, sharp increase in the rate of inward investment by multinational corporations. Two explanations are advanced: the newly available expertise in the international financial system allows multinational firms to invest with the assurance that they will have sophisticated capability to hedge risks and. because the financial sector is a sensitive sector, permission for multinational banks to enter is a sign of a commitment to a policy of open industrialization.