Does Financial Remoteness Affect Foreign Direct Investment?

Abstract

We examine the effect of financial remoteness on foreign direct investment (FDI) using a sample of 173 countries over the period 1970-2015. Our results show that financial remoteness has a significant negative effect on FDI, which suggests that proximity to major financial centres is a key factor in deciding on foreign investments. Our results are robust to alternative measures of financial remoteness and controlling for other determinants of FDI from the literature.