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Outward Direct Investment, Firm Productivity and Credit Constraints: Evidence from Chinese Firms
Author(s) -
Wang Bijun,
Tan Yuyan,
Yu Miaojie,
Huang Yiping
Publication year - 2016
Publication title -
pacific economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.34
H-Index - 33
eISSN - 1468-0106
pISSN - 1361-374X
DOI - 10.1111/1468-0106.12152
Subject(s) - productivity , china , constraint (computer aided design) , offset (computer science) , investment (military) , panel data , economics , monetary economics , business , macroeconomics , econometrics , mechanical engineering , politics , political science , computer science , law , programming language , engineering
China is currently the third largest country in terms of outward direct investment (ODI), with the investors mainly being state‐owned enterprises. This presents a question: What inhibits private enterprises from increasing ODI? Using a firm‐level panel data set for Zhejiang Province in China, we examine the impact of firm heterogeneity on private firm ODI. We have three main findings: first, a higher productivity level contributes to better access to ODI, and increases ODI value as well; second, lowering a firm's financial constraint level can increase both the probability and volume of ODI; third, productivity cannot offset the negative effect of financial constraint on private firm ODI.