Financial crisis of 2008 and outward foreign investments from China and India
Financial crisis of 2008 and outward foreign investments from China and India
We show that outward investment by Chinese firms with resource and asset seeking motives and Indian firms with market-seeking motives diverged after the financial crisis of 2008, due to different motives and the underlying financing structure of their outward investments. Indian firms faced export market contraction externally and cut back on outward investments as sales revenues shrank. In contrast, Chinese firms that relied on debt finance to seek out international assets expanded investment as investment targets became cheaper and the reliance on leverage inured Chinese firms to the fluctuations of stock markets and other financial implications of the crisis.
Financial crisis, Motives for FDI, Financial constraints, Emerging economies, Outward foreign investment
Athreye, Suma
88ded256-f1b4-4359-8d09-8539b28ee94f
Saeed, Abubakr
9b178710-8c61-4298-809a-0d3f0b674ab9
Baloch, Muhammad Saad
0baa859e-4d0d-4dda-8433-d813655c88b5
12 March 2021
Athreye, Suma
88ded256-f1b4-4359-8d09-8539b28ee94f
Saeed, Abubakr
9b178710-8c61-4298-809a-0d3f0b674ab9
Baloch, Muhammad Saad
0baa859e-4d0d-4dda-8433-d813655c88b5
Athreye, Suma, Saeed, Abubakr and Baloch, Muhammad Saad
(2021)
Financial crisis of 2008 and outward foreign investments from China and India.
Journal of World Business, 56 (3), [101190].
(doi:10.1016/j.jwb.2021.101190).
Abstract
We show that outward investment by Chinese firms with resource and asset seeking motives and Indian firms with market-seeking motives diverged after the financial crisis of 2008, due to different motives and the underlying financing structure of their outward investments. Indian firms faced export market contraction externally and cut back on outward investments as sales revenues shrank. In contrast, Chinese firms that relied on debt finance to seek out international assets expanded investment as investment targets became cheaper and the reliance on leverage inured Chinese firms to the fluctuations of stock markets and other financial implications of the crisis.
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Accepted/In Press date: 7 January 2021
Published date: 12 March 2021
Keywords:
Financial crisis, Motives for FDI, Financial constraints, Emerging economies, Outward foreign investment
Identifiers
Local EPrints ID: 477463
URI: http://eprints.soton.ac.uk/id/eprint/477463
ISSN: 1090-9516
PURE UUID: 9af02ac8-07a8-443d-b249-a476e416afd9
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Date deposited: 06 Jun 2023 17:09
Last modified: 17 Mar 2024 04:18
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Contributors
Author:
Suma Athreye
Author:
Abubakr Saeed
Author:
Muhammad Saad Baloch
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