What Drives Capital Flows ? The Case of Cross-Border M & A Activity and Financial Deepening

  title={What Drives Capital Flows ? The Case of Cross-Border M & A Activity and Financial Deepening},
  author={Julian di Giovanni},
  • Julian di Giovanni
  • Published 2002
What macroeconomic and financial variables play key roles in the foreign direct investment decision (FDI) of firms? This question is addressed in this paper using a large panel data set of cross-border Merger & Acquisition (M&A) deals for the period 1990-1999. Various econometric specifications are built around the simple “gravity model” commonly used in the trade literature. Interestingly, financial variables and other institutional factors seem to play a significant role in M&A flows. In… CONTINUE READING
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