| Under the international background of anti-globalization of the world economy,rising trade protectionism and the spread of COVID-19,global FDI has shown “low growth” accompanied by large fluctuations,while the inflow and outflow of China’s foreign direct investment have bucked the trend.How to explain the inflow and outflow of FDI,how to develop high-quality international direct investment based on the strong domestic market development demand,realize the coordinated development of two-way FDI,and promote the new development pattern of domestic and international double cycle has become an important topic of academic research.Existing literatures have discussed the motivation of OFDI in developed countries or the influence factors of IFDI in developing countries from multiple perspectives,but the consideration of financial factors remains to be further studied.China’s banking financial institutions mainly focused on capital management before the reform and opening up,however,after decades of development,it gradually changed to market regulation,and gradually formed a multi-layer banking financial structure system with complete functions,diversified forms,complementary,and division of labor cooperation.As a result,China’s banking financial institutions experienced the development process from monopoly to competition.The gradual relaxation of market access regulations on bank branches to further intensify the competition of banks.The stock reform and incremental development of the banking industry provide an opportunity for us to discuss China’s IFDI and OFDI from the perspective of finance.Based on the development status and characteristics of banking and international direct investment,this paper analyzes the influence mechanism of banking competition on IFDI and OFDI from the perspective of financial development easing financing constraints.We measure the degree of banking competition by the number of banking branches,and systematically investigate the impact of banking competition on IFDI and OFDI with empirical methods.In order to eliminate the endogenous problems of financial development,we take the differences in the establishment dates of city commercial banks in different regions as a quasi-natural experiment to further discuss the influence of city commercial banks’ establishment on IFDI.Finally,we analyze the mechanism of banking competition on the coordination of inward FDI and outward FDI.The results are as follows:First,there is an inverted “U” shape relationship between banking competition and IFDI,which firstly promotes and then restrains.After a variety of robustness tests and instrumental variable methods,this conclusion is still valid,and the banking competition affects the inflow of foreign direct investment by directly affecting the level of urban credit and indirectly changing the urban financing environment.Further research shows that the inverted “U” shape relationship between banking competition and IFDI is significant in the eastern and central regions,but it’s not significant in the western regions,and there is no north-south difference.It has an inverted “U” shape in the secondary and tertiary industries,but not in the primary industry.The competition between large state-owned commercial banks and city commercial banks has an inverted “U”shape effect on IFDI,while the competition between joint-stock commercial banks,foreign-funded banks and rural commercial banks shows a “U” shape effect,while the competition between rural credit cooperatives has no obvious effect on IFDI.Second,the establishment of city commercial banks has a significant role in promoting IFDI.This result remained robust after a series of robust analyses.Combined with enterprise data,it is confirmed from the enterprise level that the establishment of city commercial bank significantly improves the possibility of local enterprises obtaining loans from banks,and can affect the location distribution of IFDI by alleviating financing constraints of enterprises.In addition,we also analyze the impact of merging and setting up branches on IFDI from two perspectives of capital scale and operation scale expansion of city commercial banks.The results show that the establishment of branches of city commercial banks has no significant effect on IFDI,while the merger and acquisition of city commercial banks has a significant effect on IFDI.Therefore,compared with blindly expanding the number of local financial institutions,a reasonable financial structure is more attractive to IFDI.Third,banking competition significantly improves the probability of Chinese enterprises’ outward foreign direct investment,and this conclusion still holds after a variety of robustness tests.The mechanism research shows that banking competition can improve the probability of OFDI by increasing the possibility of enterprises obtaining loans and alleviating financing constraints.The results show that banking competition improves the probability of OFDI in light industry and manufacturing industry,but reduces the probability of OFDI in non-manufacturing and non-light industry enterprises.Banking competition significantly promots the probability of private enterprises’ OFDI,but reduces the probability of state-owned enterprises and foreign-funded enterprises’ OFDI.The promotion effect of banking competition on enterprises’ OFDI is not affected by enterprises’ foreign business scope,income level of the host country and whether it is a “Belt and Road” country.Fourth,banking competition has a significant promotion effect on the coordination of inward FDI and outward FDI,and the results are still robust after considering various robustness test methods.The test results of different periods show that the influence of banking competition on the coordinated development of two-way FDI is different in different periods,and generally shows a trend of increasing with years.The regional heterogeneity test results show that banking competition significantly promotes the coordination of two-way FDI in the eastern coastal and high-income regions,while it inhibits the coordination of two-way FDI in the western inland and low-income regions.From the interactive mechanism of banking industry influencing two-way FDI,banking competition can affect OFDI by reducing IFDI,but OFDI has no obvious moderating effect on IFDI.When the intensity of banking competition reaches a certain condition,banking competition can affect the coordination of two-way FDI by adjusting regional IFDI and OFDI flows.We propose the following policy recommendations.First,coordinate the stock reform and incremental development of banking financial institutions,and attach importance to the service efficiency of financial institutions while improving the financial structure.Second,deepen the reform of banking market structure and enhance the competitiveness of banking financial institutions.Appropriate introduction of banking competition mechanism to improve the distortion of credit resource allocation,clear the market positioning of various types of banking financial institutions,give play to the essential function of banking financial institutions to serve the real economy,continue to expand the opening of the banking industry to enhance the competitiveness of domestic banking financial institutions.Third,coordinate regional financial and economic development and enhance financial and economic matching.Through appropriate industrial transfer and improvement of enterprise investment and financing mechanism,foreign direct investment enterprises in the eastern region should be appropriately guided to move to the central and western regions,and the opening up of banks should be deeply combined with the opening up of regional economy and enterprises.Fourth,we should promote the coordinated development of two-way FDI and improve the quality of opening up.Comprehensive summary of the past international direct investment practice experience,to achieve quantitative change to qualitative change.We will improve policies and systems related to“bringing in” and “going global” to ensure the quality of opening up.We should formulate reasonable opening-up strategies based on the domestic and international economic environment.The contribution of this paper is reflected in three aspects: In terms of research content,this paper expands the literature on banking competition,IFDI,OFDI and other aspects.In terms of research structure,two-way FDI is brought into the same research framework,and the influence of banking competition on FDI inflow and outflow is discussed respectively.In terms of research methods,a variety of econometric methods and multi-dimensional data are used to ensure the accuracy of research conclusions. |
