The timing of foreign direct investment under uncertainty: Evidence from the Spanish banking sector

This paper investigates the timing of foreign direct investment in the banking sector which, among other things, leads to differential benefits for the first entrants in a foreign location, and to problem of reversibility. When uncertainty is considered, the existence of some ownership-location-internalization advantages can make foreign investment less reversible and/or more delayable. Such advantages are examined and a model of the timing of foreign direct investment specified. The model is then tested for the Spanish case using duration analysis.