The Avoidance of Restrictive Monetary Policies in Host Countries by Multinational Firms

Foreign Direct Investment and External Financing Conditions: Evidence from Normal and Crisis Times

“…Such a surprising result might have its roots in opportunistic FDI driven by crisis-induced opportunities. Krugman (2000) and Aghion et al (2004) discuss how foreign investors can be attracted by the temporary depressed price of an asset or a factor of production in countries undergoing an economic and financial crisis, while other studies suggest that the opportunities that crises create for FDI take the form of weaker domestic competition (Hawkins and Macaluso, 1977;Desai et al, 2008). However, as shown in Columns 7-9, the extent of this bargain-hunting behavior appears to have been constrained by the availability of external finance in destination countries.…”

The End of Moderate Inflation in Three Transition Economies?

“…leveraged takeovers of rivals, as the interest rate increases. Privatization has also reduced the effectiveness of monetary policy by placing many firms in the hands of foreign MNCs, thus enabling them to evade home-country monetary policies through their access to parent-company funds (Hawkins and Macaluso, 1977;Estrin et al, 2000). There is also evidence that the real sector, meaning non-financial firms, is to a large extent self-financed, as the net flow of funds has been largely from the non-financial sector to banks rather than the other way (Dittus, 1994).…”