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Financing Multinationals

Jingting Fan & Wenlan Luo

The Review of Economics and Statistics2026https://doi.org/10.1162/rest.a.1701article
AJG 4ABDC A*
Weight
0.50

Abstract

We develop, validate, and quantify a tractable model of multinational firms that connects multinational production (MP) with foreign direct investment (FDI). Firms choose where to produce and how to finance the production. They can access external finance, but capital market imperfections prevent them from relying exclusively on it for affiliate production, giving rise to FDI. The model rationalizes the three-way relationship between MP, FDI, and financial market conditions that we document and leads to novel welfare implications. Quantification of the model highlights the relevance of these welfare implications and the importance of financial factors in shaping the activities of multinationals.

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https://doi.org/https://doi.org/10.1162/rest.a.1701

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@article{jingting2026,
  title        = {{Financing Multinationals}},
  author       = {Jingting Fan & Wenlan Luo},
  journal      = {The Review of Economics and Statistics},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.1162/rest.a.1701},
}

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Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

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