Author: Haoyuan Ding，Bei Nia，Chang Xue，Xiaoyu Zhang

Abstract:Land transaction data and data on the outward foreign direct investment (OFDI) by Chinese listed firms are analyzed to find that a firm's land holdings have positive effects on its likelihood of investing overseas, the frequency of such investments, and value investment. We use prefecture-level land supply area and price as instrumental variables to deal with the endogeneity problem and get consistent results. Our analysis suggests that firms can obtain better loan terms with land as collateral, and that more affordable funding promotes OFDI. Non-state- Owned enterprises rely on land as collateral in this way more than state-owned enterprises. Such use of collateral is more pronounced for operating firms in provinces with poor local institutions and in host countries with better institutional quality.

Key words: Land holdings, outward foreign direct investment, collateral

The article will be published online in the Journal of International Money and Finance in March 2022, which is a B+ award journal for the academic journal classification scheme of the School of Economics and Management of Wuhan University.