Financial Development Level、 Capital Allocation Efficiency And Foreign Direct Investment

With the deepening of China's reform and opening up,the influence of China's foreign direct investment in global foreign direct investment has also expanded.In 2017,China's investment flow is second only to the United States and Japan,ranking third in the world.As an important way for the country to actively integrate into the global wave,foreign direct investment has also become an important source of power for the long-term stable and sustainable development of China's economy.In the past two years,China's foreign direct investment has achieved rapid growth thanks to the implementation of a series of external communication top-level designs such as the “Belt and Road”.However,the company's foreign direct investment activities are inseparable from strong financial support.It is often difficult to maintain the company's own efforts,and external financing is needed to solve the problem of corporate funds.Therefore,how financial development affects foreign direct investment has become an issue that we need to focus on.At the same time,the impact of extensive financial development on foreign direct investment may gradually shrink.We also need to change the new growth model of foreign direct investment by improving the efficiency of capital allocation.Based on this,this paper aims to study the impact of financial development level,foreign direct investment and the interaction between the two on foreign direct investment.This paper firstly combs the relevant theories and researches on financial development,capital allocation efficiency and foreign direct investment.From the theoretical level,it analyzes in detail the financial development,capital allocation efficiency and the interaction path and influence mechanism of foreign direct investment.Then construct four indicators,such as total credit and non-state-owned credit,to comprehensively measure the level of financial development from the perspective of financial scale development and financial structure development,and construct capital price distortion and capital mismatch index through production function estimation method.Two indicators measure the efficiency of capital allocation.On this basis,by constructing static and dynamic panel measurement models,the provincial panel data of China from 2005 to 2016 will be regressed,and the impact of financial development level and capital allocation efficiency and their interaction on foreign direct investment will be empirically examined.The study found that during the inspection period,the improvement of financial development level,including financial scale development and financial structure development,can significantly improve China's foreign direct investment.The regional capital mismatch will have a negative impact on foreign direct investment,that is,the increase in capital allocation efficiency will positively promote foreign direct investment.After we joined the interactive term,we also found that the overall effect of capital allocation efficiency on FDI is affected by the level of financial development in the region,that is,the level of financial development can significantly improve the distortion of capital prices and the mismatch of capital mismatch with FDI.Influencing the effect.In the robustness test,different metrics were replaced and the results remained robust.Through further research by region,it is found that there are regional differences in the promotion of foreign direct investment in the level of financial development and capital allocation efficiency,and the difference in the level of overcapacity between regions will also affect the estimation results.The enlightenment of this paper is that under the background of China's gradual promotion of the “Belt and Road Initiative”,we should actively promote financial deepening reform,so that the financial system of each region can coordinate and balance development,promote the overall improvement of financial development level,and carry out structural structure from the supply side.Reform,effectively alleviate the problem of capital mismatch in the market,optimize the function of market capital allocation,and promote the further prosperity of foreign direct investment on this basis.