scholarly journals Capital Flows and Financial Stability in Emerging Economies

2017 ◽  
Author(s):  
Christopher (Kit) F. Baum ◽  
Madhavi Pundit ◽  
Arief Ramayandi
Keyword(s):  
Emerging Economies ◽  
Capital Flows ◽  
Financial Stability

Capital flows to emerging economies: Minsky in the tropics

2010 ◽  
Vol 35 (4) ◽  
pp. 663-683 ◽  
Author(s):  
M. R. Agosin ◽  
F. Huaita
Keyword(s):  
Emerging Economies ◽  
Capital Flows ◽  
The Tropics

The inter-relationships among liquidity creation, bank capital and credit risk: evidence from emerging Asia–Pacific economies

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Tu D.Q. Le ◽  
Xuan T.T. Pham
Keyword(s):  
Credit Risk ◽  
Emerging Economies ◽  
Financial Stability ◽  
Generalized Method Of Moments ◽  
Negative Relationship ◽  
Capital Requirements ◽  
Asia Pacific ◽  
Bank Capital ◽  
Content Type ◽  
Small Banks

PurposeThis study investigates the inter-relationships among liquidity creation, bank capital and credit risk in selected emerging economies between 2012 and 2016.Design/methodology/approachA three-step procedure as proposed by Berger and Bouwman (2009) is used to measure liquidity creation. Thereafter, a simultaneous equations model with the generalized method of moments (GMM) estimator is used to examine the links between liquidity creation, bank capital and credit risk.FindingsThe findings indicate that bank capital and credit risk affect each other positively after controlling for liquidity creation. Also, the findings show a negative impact of credit risk on liquidity creation while our findings do not find any evidence to confirm the reverse relationship between them. Furthermore, the findings demonstrate a two-way negative relationship between liquidity creation and bank capital in these emerging economies. Finally, the results indicate a positive relationship between capital and credit risk, especially in the case of small banks in the sample.Practical implicationsThe findings suggest that the trade-off between the benefits of financial stability induced by tightening capital requirements and those of improved liquidity creation has crucial implications for policymakers and bank regulators in making the banking system more resilient. A positive impact of capital on credit risk emphasizes that the authorities in selected emerging economies should put more attention on small banks to ensure their exposures under target control.Originality/valueThis is the first study that examines the dynamic interrelationships among liquidity creation, bank capital and credit risk in the Asia–Pacific region.

Restrictive Policy to Curb Capital Flows Volatility

2021 ◽  
pp. 2150010
Author(s):  
Chokri Zehri
Keyword(s):  
Exchange Rate ◽  
Emerging Economies ◽  
Capital Flows ◽  
Capital Controls ◽  
Dynamic Panel Data ◽  
Exchange Rate Shocks ◽  
Local Projections ◽  
Empirical Approaches ◽  
Restrictive Policy

We examine the role of the restrictive policy, through capital controls, in reducing the capital flows volatility. The study highlights the effects of these controls to dampen international financial shocks. Using quarterly data of 28 emerging economies over the period between 1999 and 2019, three empirical approaches are applied, dynamic panel data, ARDL, and local projections models. Four indexes of capital controls have contributed to the finding that a tighter level of capital controls reduces the sensitivity of capital flows to monetary and exchange rate shocks. These findings on the benefits of capital controls are particularly asymmetric according to the differences between controls on inflows and outflows, and the differences between floating and pegged exchange rate regimes.

Effect of capital flows on financial stability in middle-income countries

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Kolawole Ebire ◽  
Saif Ullah ◽  
Bosede Ngozi Adeleye ◽  
Muhammad Ibrahim Shah
Keyword(s):  
Capital Flows ◽  
Financial Stability ◽  
Financial Integration ◽  
Convincing Evidence ◽  
Foreign Direct Investments ◽  
Middle Income ◽  
Content Type ◽  
Middle Income Countries ◽  
Correlation Consistent ◽  
Emerging And Developing Countries

Purpose This study aims to examine the effect of various forms of capital flows on financial stability in middle-income countries from 2010 to 2017 using the World Bank economy classifications of 121 economies. Design/methodology/approach Panel spatial correlation consistent approach was used in this study. Findings The findings provide convincing evidence that in middle-income countries, capital flows are positive and significant predictors of financial stability and that financial systems in advanced economies are more stable than those of emerging and developing countries. However, outward foreign direct investments are shown to have the largest potential for ensuring financial stability. Originality/value Globalization has fostered financial integration of nations, which is manifested in capital flows from lower-income countries to middle-income and upper-income countries and vice versa. These flows can lead to financial instability if not properly controlled. The authors show how the various forms of capital flows affect the financial stability in middle-income countries.

A Fantastic Rain of Gold: European Migrants' Remittances and Balance of Payments Adjustment During the Gold Standard Period

2009 ◽  
Vol 69 (4) ◽  
pp. 951-985 ◽  
Author(s):  
Rui Esteves ◽  
David Khoudour-Castéras
Keyword(s):  
Emerging Economies ◽  
Financial Stability ◽  
Balance Of Payments ◽  
Optimum Currency Area ◽  
Adjustment Mechanism ◽  
Currency Area ◽  
Mountain Agriculture ◽  
Optimum Currency ◽  
Opening Up ◽  
Related Pattern

While the pre-1914 mass migrations have been widely studied, the related pattern of emigrants' remittances is still largely untouched. This article aims at filling this gap by analyzing the contribution of remittances to financial stability. In the optimum currency area theory, labor mobility can ease the adjustment mechanism for countries under fixed exchange rate regimes. We confirm this claim by showing that emigrants' remittances reduced the incidence of financial disturbances among a sample of emerging economies characterized by substantial emigration. This result underscores the benefits for emerging economies from opening up to international factor flows, despite the associated financial turbulence.“A fantastic rain of gold.” Thus observers in the decades between the nineteenth and the twentieth century described the influx of capital toward Italy generated by emigration remittances. These flows were spread piecemeal across the countryside of the entire peninsula, especially into the poorest regions of marginal mountain agriculture.1

Sign in / Sign up

Export Citation Format

Share Document