The Cross-Border M&A And The Domestic Financial Deeping

This paper presents an increasing important role the cross-border mergers andacquisitions, which dominates the foreign direct investment (FDI) in the last twodecade, plays in economic growth, technology advance and national welfare throughthe world. Chinese enterprises are getting ready to invest abroad, after developedrapidly in recent years. I hope the research can uncover some relationship between thecross-border M&A and the financial deeping, financial aspects, economic growth..What key roles do macroeconomic and financial variables play in the role of thecross-border M&A decision of firms? This question is addressed in this paper using asectional data of 50 countrys, which contain 28 developed countrys and 22 developingcountrys, financial variables and other institutional factors seem to play a significantrole in M&A flow. In particular, the size of financial markets, as measured by thestock market capitalization to GDP ratio and the domestic credit provided by thebanks and near-banks to GDP ratio, has a strong positive association with domesticfirms investing abroad.