The Impact Of Bilateral Currency Swap Agreements On Chinese Firms’ OFDI

Currency is the symbol of national credit and also national strength.Under the modern international monetary system,the actual supply capacity of the international financial market cannot meet the demand for international currency.Especially due to the impact of the 2008 financial crisis,the shortage of international liquidity has become the norm.As an intergovernmental cooperation tool that can be used to make up for insufficient liquidity and stabilize financial markets,bilateral currency swap agreements are highly valued by the central banks of various countries.In recent years,China has actively promoted the signing of currency swap agreements with countries and regions around the world,which has won wide recognition from the international community.By the end of 2020,China has signed bilateral currency swap agreements with 40 countries and regions,with a cumulative scale of more than 12 trillion yuan.Scholars have also conducted a lot of research on these bilateral currency swap agreements,and found that bilateral currency swap agreements can alleviate the lack of liquidity faced by host countries,thereby promoting the growth of foreign trade and investments of Chinese enterprises.However,most of the analysis is based on macro data,and there is still a lack of research on the structural issues of foreign investments.The purpose of this thesis is to study the impact of the signing of bilateral currency swap agreements on the outward foreign direct investments activities of Chinese enterprises.Firstly,based on the related theory and literature review,this thesis analyzes the relationship between bilateral currency swap agreements and outward foreign direct investments of enterprises,and further analyzes the mechanism by which bilateral currency swap agreements can affect outward foreign direct investments of enterprises.Next,in terms of empirical testing,from the perspective of the enterprise,this thesis uses the data of Chinese enterprises’ outward foreign direct investments from 2005 to 2020 to construct a binary marginal model,and discusses the impact of bilateral currency swap agreements on Chinese enterprises’ outward foreign direct investments.The empirical results show that the bilateral currency swap agreements can significantly promote the outward foreign direct investments of Chinese enterprises,and from the perspective of the binary margin,the impact on the intensive margin is significantly positive,but the impact on the extensive margin is negative and not significant,indicating that this impact is mainly reflected in scale rather than diversity.Through the analysis of the intermediary effect model,it is found that the bilateral currency swap agreements promotes two channels of outward foreign direct investments of Chinese enterprises,which are to stabilize the exchange rate fluctuation of the host country’s currency against the RMB and reduce the investment barrier of the host country.Heterogeneity analysis shows that,from the perspective of the host country,the bilateral currency swap agreements has a stronger impact on outward foreign direct investments promotion in countries adopting a floating exchange rate system than in countries adopting a fixed exchange rate system,and in developed countries than in developing countries;from the perspective of enterprises,this impact for state-owned enterprises is stronger than that of non-state-owned enterprises,and for financial enterprises is stronger than that of non-financial enterprises.Finally,based on the conclusions above,this thesis puts forward some targeted suggestions.