An empirical investigation into the banking intermediation and Foreign Direct Investment inflows in China Online publication date: Thu, 18-Feb-2010
by Jean-Claude Maswana
International Journal of Business and Emerging Markets (IJBEM), Vol. 2, No. 2, 2010
Abstract: The Toda–Yamamoto version of the Granger causality test was employed to investigate the FDI-banking sector interactions in China. Empirical findings show that banking development help attract FDI inflows rather than the reverse. Interestingly, FDI was found to influence the whole structure of interest rates and vice versa, which implies that FDI inflows may well represent entrenched institutional constraints; suggesting that effective policies for dealing with economic overheating and efficiency of banking intermediation should encompass a combination of changing FDI volume and the cost of banking intermediation.
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