Inter-industry FDI spillovers from foreign banks: Evidence in transition economies |
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Authors: | Shusen Qi Kent Ngan-Cheung Hui Steven Ongena |
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Affiliation: | 1. School of Management, Xiamen University, Xiamen, China;2. SFI, KU Leuven, NTNU Business School & CEPR, University of Zurich, Zürich, Switzerland |
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Abstract: | Using a sample of nonfinancial domestic firms in transition economies from Eastern Europe and Central Asia, we examine whether and how inter-industry spillover from foreign direct investment in the banking sector occurs. Our findings show that the innovation pursued by domestic firms benefits from foreign bank penetration. However, these positive inter-industry spillovers surprisingly do not seem to work through enhanced credit access. We further find these positive spillovers to occur mainly for foreign banks that use relationship lending, domestic firms that do not export, and host countries that are less open to the global market. |
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Keywords: | FDI spillovers foreign banks innovation services FDI transition economies |
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