scholarly journals Reversibility of Different Types of Capital Flows to Emerging Markets

2006 ◽  
Author(s):  
Ozan Sula ◽  
Thomas D. Willett
Keyword(s):  
Emerging Markets ◽  
Capital Flows ◽  
Different Types

scholarly journals Revisiting Sovereign Ratings, Capital Flows And Financial Contagion in Emerging Markets

2015 ◽  
Vol 1 (2) ◽  
pp. 3 ◽  
Author(s):  
Noha Emara ◽  
Ayah El Said
Keyword(s):  
Emerging Markets ◽  
Capital Flows ◽  
Financial Contagion ◽  
International Capital ◽  
Dynamic Panel ◽  
International Capital Markets ◽  
Sovereign Credit Ratings ◽  
Different Types ◽  
The Impact ◽  
The Relationship

This study revisits sovereign credit ratings, contagion and capital flows to Emerging Markets (EMs), and clarify the relationship between them. Specifically, this study analyzes how the changes in sovereign rating influence different types of capital flows to EMs and whether the changes in the different kinds of capital flows in one country be explained by a sovereign ratings’ change in another country. Using Arellano-Bover/Blundell-Bond Dynamic Panel System GMM for 23 EMs over the period 1990-2012 the results of the study suggest that sovereign ratings is a crucial factor for EMs’ access to international capital markets and that capital flows is a major source of financing for Ems. In addition, the results show that financial contagion may continue to be a threat to capital flowing into EMs and that financial crisis increases the impact of sovereign rating on foreign direct investment but is not the case with portfolio investment.

scholarly journals Reach for Yield and Fickle Capital Flows

2018 ◽  
Vol 108 ◽  
pp. 493-498 ◽  
Author(s):  
Ricardo J. Caballero ◽  
Alp Simsek
Keyword(s):  
Emerging Markets ◽  
Capital Flows ◽  
Developed Markets ◽  
Global Liquidity

In Caballero and Simsek (2017), we develop a model of fickle capital flows and show that, when countries are similar, international flows create global liquidity and mitigate crises despite their fickleness. In this paper, we focus on the asymmetric situation of Emerging Markets (EM) exchanging flows with Developed Markets (DM) that feature lower returns but less frequent crises. Relatively high DM returns help to mitigate EM crises by reducing fickle inflows and by providing greater liquidity. The situation dramatically changes as the DM returns fall, as this increases the fickle inflows driven by reach for yield and exacerbates EM crises.

Regulating Capital Flows: A Historical Perspective

2018 ◽  
Author(s):  
Atish R. Ghosh ◽  
Jonathan D. Ostry ◽  
Mahvash S. Qureshi
Keyword(s):  
Emerging Markets ◽  
Capital Flows ◽  
Historical Perspective ◽  
Financial Liberalization ◽  
Capital Controls ◽  
Authoritarian Regimes ◽  
Capital Inflows ◽  
Macroeconomic Policies ◽  
Advanced Economies ◽  
Guilt By Association

This chapter summarizes how thinking about capital flows and their management has evolved in both policymaking and academic circles. Many advanced economies used restrictions on capital inflows for prudential purposes—even as they pursued financial liberalization more broadly—until the 1980s, when capital account restrictions began to be swept away as part of broader liberalization efforts. Likewise, many emerging markets that had inflow controls for prudential reasons dismantled them when liberalizing domestic financial markets and controls over outflows. That the use of capital controls as a means of managing inflows is often viewed with suspicion may be partly a “guilt by association” with outflow controls and exchange restrictions. Historically, these have been more prevalent and more intensive, and their purpose has been to prop up authoritarian regimes or poor macroeconomic policies, often affecting both current and capital transactions.

scholarly journals Do Sounder Banks Make Calmer Waters? The Link between Bank Regulations and Capital Flow Waves

2020 ◽  
Vol 110 ◽  
pp. 516-522
Author(s):  
Kristin J. Forbes
Keyword(s):  
Capital Flows ◽  
Financial Intermediation ◽  
Capital Flow ◽  
Sudden Stops ◽  
Capital Asset ◽  
Negative Effects ◽  
Bank Regulations ◽  
Increased Risk ◽  
Different Types ◽  
The Waves

This paper tests if prudential and macroprudential regulations have meaningfully reduced the incidence of capital flow “waves,” that is, of sudden stops and surges of capital flows from abroad. The results support other work documenting changes since 2008 in how global factors affect capital flows but provide mixed evidence on how regulations have affected the incidence of sharp capital flow movements. Regulations that strengthen banks (such as higher capital-asset ratios) meaningfully reduce the incidence of surges, but tighter macroprudential regulations appear to have done little to reduce the incidence of capital flow waves--and are even correlated with an increased risk of sudden stops. This may reflect their limited use to date, or how they interact with different types of capital flows. Macroprudential regulations may have reduced the volume and volatility of bank flows but shifted financial intermediation outside the regulated sector and thereby increased the volatility of debt and equity flows. These reforms could still provide important benefits, however, in terms of building the resilience of banks and thereby mitigating the negative effects of capital flow waves on the broader economy. Even if the waters are not much calmer, the waves should do less damage.

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