The determinants of cross-border debt investments in ASEAN+3: A gravity model approach

• Main Author: Pratyaksa, Rorian.
• Format: text
• Language: English
• Published: Animo Repository 2013
• Subjects: Economics
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/2666
• Institution: De La Salle University

We study cross-border debt investments in selected ASEAN+3 countries, covering the 2001 - 2011 period and using a gravity model approach. We introduced macroeconomic, financial, geographical and demographic factors on cross border debt investments transaction. We found that macroeconomic factors - the nominal Gross Domestic Product (GDP) level of the destination country and fiscal balance to GDP of the destination country significantly affects bilateral debt investments in the region. Geographical (distance) and demographic (language and colony) factors in our gravity model are found to be significant factors that affect cross-border debt investments. Our study shows that debt markets in the ASEAN+3 region are not frictionless, as cross-border debt investments in the region are being influenced by macroeconomic, geographical and demographic factors which are nominal GDP of destination country, fiscal balance to GDP ratio of destination country, distance, language and colony.