FINANCING PATTERN OF MULTINATIONAL ENTERPRISES IN A DEVELOPING HOST COUNTRY. The Sri Lankan Experience

Multinational enterprises (MNEs) have played a vital role in the economies of developing countries. However, empirical studies on some crucial aspects of MNE involment in these economies appear to be inadequate. One such aspect is their financing pattern. This paper attempts to shed some light on this aspect through an analysis of balance sheet data of a sample of MNE affiliates operating in the manufacturing sector of Sri Lanka. The findings do not support the generally held view that MNEs gear themselves more highly than local firms and that they make use of a greater degree of domestic commercial bank credit. Further, the study reveals that the direct financial contributions of parent companies to equity capital of their affiliates are very small, indicating a low level of direct foreign inflow of capital into the host country. Acknowledgement