Financial Development And Outward Foreign Direct Investment

Outward Foreign Direct Investment(OFDI)is an important way for a country to integrate into the tide of global economic globalization,and it is also an important driving force for the stable and sustainable development of China's economy.Under the new historical orientation that socialism with Chinese characteristics has entered a"new era",China has proposed the important idea of building the human destiny Community and the great practice of the "the Belt and Road Initiative." Outward foreign direct investment is an important way to realize this concept and practice.However,the OFDI of enterprises require a large amount of funds.It is obviously difficult to realize their goals if only relying on the company's own funds.This requires the development of the financial industry to provide necessary support for corporate financing activities.Therefore,financial development has an important impact on China's OFDI.This paper collates the relevant theories and research literature on financial development and OFDI,analyzes the mechanism of financial development impacting OFDI from two aspects:direct impact and indirect impact,and analyzes China's financial development and OFDI from the national sample and the four major economic regions.This paper uses three indicators of financial development scale,financial development efficiency,and financial development structure to measure financial development.Based on the establishment of relevant theoretical models,this paper regresses the inter-provincial panel data of China from 2003 to 2015,and studies the impact of financial development on China's OFDI from two perspectives of the national sample and the four major economic regions.Research indicates as follows:First,from the national sample,the three indicators of financial development scale,financial development efficiency,and financial development structure all have a positive effect on the development of China's foreign direct investment activities,which is consistent with our expected judgments.Secondly,from the perspective of the four major economic regions,the scale and the structure of financial development have basically the same effect on foreign direct investment as the national sample.Third,from the perspective of the four economic regions,the impact of financial development efficiency on OFDI reflects different characteristics.For the relatively developed eastern coastal areas and central region,the increase in the efficiency of financial development will curb OFDI.For relatively backward western regions and northeast regions,the improvement of financial development efficiency will promote OFDI.It is also consistent with the viewpoints put forward in related research by Yu Guansheng,Yuan Dongyang(2014),and Jiang Guanhong and Zhang Xinyue(2016).Finally,according to the conclusion of this paper,we give the policy implications of how to use financial development to promote OFDI.