An Empirical Study Of Financial Development In Host Country And China’s Outward Foreign Direct Investment

In the reform and opening up and promote global economic situation, China’s integration into the process of economic and financial globalization is accelerating, the scale of China ’s outward foreign direct investment enterprise is growing rapidly. China’s enterprises exist in 184 countries(regions) of outward foreign direct investment behavior, but the scale of investment in the country but there is a big difference, which also makes foreign scholars began to focus on what factors of the host country are conducive to attracting outward foreign direct investment. Among them, the financial development of the host country is often easily overlooked factor. So the host country financial development affect outward direct investment? Taking into account the distribution of China’s outward foreign direct investment is not balanced, the present study attempts to outward foreign direct investment from the perspective of empirical analysis of the impact of differences in financial development of the host country ’s outward direct investment to finance the development of the host country to explore the factors that impact on outward foreign direct investment mechanism to provide the theory of China’s outward foreign investment reference and empirical evidence. The literatures which researched financial development in host country affecting China’s outward foreign direct investment is relatively scarce. So it has theoretical and practical significance to study how the host country’s financial development affects China’s outward foreign direct investment.This study from the financial depth and financial accessibility, financial efficiency and financial stability, four dimensions to comprehensive measure of financial development in host countries. Respectively, to build the two types of banks and financial markets from the aspects of the above four dimensions of financial subject index, and try from two angles of banks and financial markets to analyze how financial development affect China’s outward foreign direct investment, and to explore the host country financial development factors impact on China’s outward foreign direct investment mechanism, provide theoretical reference for China’s outward foreign direct investment and empirical basis. In this paper, based on the availability of data in 2003-2011 China’s outward foreign direct investment in the country or region to select the data of 45 countries or regions as sample, using the empirical test of the host country financial development impact on China’s outward foreign direct investment. In order to more deeply in this paper, the mechanism of host country financial development’s influence on China’s outward foreign direct investment. The empirical results show that: from the point of the bank, China’s outward foreign direct investment tends to flow into the host country better development depth and bank stability more country or region; From the point of the financial market, financial market is bigger, better service accessibility in financial market, financial market stability more countries or regions, it is easier to get the favour of China’s outward foreign direct investment. In order to obtain a robust result, this study applies two-system GMM test method for robustness testing, the conclusion is consistent with the foregoing.The findings show that China’s foreign direct investment should tend to develop more depth of bank, bank greater stability, greater financial market size, financial markets and better services, greater stability of financial markets countries or regions. To encourage and guide enterprises to implement China financing from the host country, expand the enterprise to carry out outward foreign direct investment financing channels. Under the current international socio-economic background, will host financial development and foreign investment policies combined to promote the coordinated development of the host country financial development and foreign investment, is feasible policy options.