In this paper we analyze the conditions under which a foreign direct investment (FDI) involves a net capital flow across countries. Frequently, foreign direct investment is financed in the host country without an international capital movement. We develop a model in which the optimal choice of...

Corruption decreases liquidity available to institutional traders and discourages foreign portfolio investment inflows into a country. Corruption also increases corporations' cost of equity capital. The effects of corruption on foreign investment and the cost of equity capital are nonlinear and...

A critical question faced by any sovereign seeking to raise funds in the bond market is whether to issue the debt under foreign or local parameters. This choice determines other key characteristics of any bond issue such as which banks, lawyers, and investors will be involved. Most important...