Browsing by Subject "F20"

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  • Fung, K.C.; Korhonen, Iikka; Li, Ke; Ng, Francis (2008)
    BOFIT Discussion Papers 9/2008
    Published in Journal of Economic Integration, September 2009, v. 24, iss. 3, pp. 476–504
    China has emerged as one of the world's leading recipients of foreign direct investment (FDI). Meanwhile, the successful transition experience of many Central and Eastern Euro-pean countries (CEECs) also enables them to attract an increasing share of global foreign investment, particularly from the European Union (EU). What is the relationship between inward FDI of China and the CEECs? We conceptualize the relationship according to three alternative paradigms: 1) China and the CEECs each exist in its own regional pro-duction network, with no linkage between FDI flows into China and into CEECs; 2) China and the CEECs together comprise a global production network, so that FDI into China is positively related to FDI into CEECs; and 3) FDI into China is a substitute for FDI into the CEECs, so that the correlation between them is negative. In this paper, we employ pan-el data to study this issue in detail. Specifically, we compare empirical estimates for 15 CEECs over the 15-year period 1990-2004 using four different econometric approaches: FGLS with Random effects, FGLS with fixed effects, EC2SLS and GMM. The result supports the conclusion that China's inward FDI does not crowd out CEECs' inward FDI. In fact, it shows that in some circumstances FDI flows in these two regions are moderately complementary. In addition, our analysis confirms the importance for FDI flows of recipient-country characteristics such as market size, degree of trade liberalization and labor quality, as well as a healthy global capital market. JEL classification numbers: F20, F21, F43 Keywords: Foreign Direct Investment (FDI), Regional Networks, Global Supply Chain, China's FDI, Central and Eastern European Countries' FDI
  • Mayes, David G.; Nieto, Maria J.; Wall, Larry (2007)
    Bank of Finland Research Discussion Papers 7/2007
    Published in Journal of Financial Stability, Volume 4, Issue 3, September 2008, pp. 232-257
    Prompt Corrective Action (PCA) provides a more efficient mechanism for dealing with problem banks operating in more than one European country. In a PCA framework, a bank's losses are likely to be substantially reduced. This reduction in the losses to deposit insurance and governments will improve the problem of allocating those losses across the various insurance schemes and make it less likely that any deposit insurer will renege on its obligations in a cross-border banking crisis. This paper explores the institutional changes needed in Europe if PCA is to be effective in resolving the cross-border agency problems that arise in supervising and resolving cross-border banking groups. The paper identifies these changes starting with enhancements in the availability to prudential supervisors of information on banking groups' financial condition. Next, the paper considers collective decision-making by prudential supervisors with authority to make discretionary decisions within the PCA framework as soon as a bank of a cross-border banking group falls below the minimum capital standard. Finally, the paper analyses the coordination measures that should be implemented if PCA requires the bank to be resolved. JEL classification numbers: G28, K23, F20 Keywords: banking supervision, European Union, Prompt Corrective Action