This study uses a threshold regression model and finds new evidence that the positive impact of FDI on growth "kicks in" only after financial market development exceeds a threshold level. Until then, the benefit of FDI is non-existent.

We use cointegration analysis of a new longitudinal legal dataset to show that strengthening creditor rights in India during the 1990s and 2000s led to an increase in bank credit, supporting the view that legal systems can shape financial development.