Drivers of intraregional M&As within developing Asia

Abstract

A large part of the upsurge in global Foreign Direct Investment (FDI) until the global financial crisis of 2008–2009 has been due to mergers and acquisitions (M&As) as opposed to Greenfield FDI. Also, noteworthy is the growing significance of developing Asia in these cross-border M&As, both as sources of finance as well as destinations of investments. These cross-border M&A flows have deepened the economic integration of developing Asia with the global economy. This paper examines the extent and determinants of M&As to and from developing Asia over the period 2000–2010 with particular emphasis on the financial drivers of intraregional M&As. Global liquidity and risk conditions, as proxied by London Inter Bank Offered Rate (LIBOR), consistently show up as being an important driver of intraregional flows.