- 期刊
Does Openness of Security Markets to Foreign Funds through the QFII Scheme Relax Financial Constraints? The Case of Taiwan
並列摘要
This paper examines whether Taiwan's openness to foreign investment in the domestic security markets relaxes firms' financial constraints. Taiwan has adopted a progressive strategy in opening its security markets. This paper divides this long period (1991-2003) using two major liberalization steps to investigate the influences of different stages of openness on firms' financial constraints. For our panel data sets, standard least squares methods cannot be applied. After conducting the F-test under the hypothesis that the intercepts are equal across section units and the Human test, a fixed effects model is used. Our hypothesis that openness security markets to foreign funds mainly through the QFII scheme can release firms' dependence on internally generated funds is empirically proven. This implies that opening security markets to foreign funds does help firms to relax financial constraints. We further divide the sample into two groups: MSCI (Morgan Stanley Capital International) and Non-MSCI Taiwan Index component stocks. The results show that, for the MSCI Taiwan Index component group, the greater the openness levels, the less reliance on internal funds for investment.