Abstract
The present tests the causal interactions between foreign direct investment (FDI) and banking intermediation in China, the results showed that real interest rates Granger-caused FDI inflows, while the latter led service sector's value added. Interestingly, interest rate spread and FDI mutually influenced each other. Contrary to conventional wisdom, FDI inflows have been found to be more influenced by opportunity costs in the banking sector (interest rate structure). The results suggest that growing FDI inflows in China might have contributed in hindering the development of banking intermediation. Eventually, this finding spotlights the need for liberalisation of the entire interest rate and recomposition of capital inflows.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callMore From: International Journal of Economics and Business Research
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
