Are Capital Flows Fickle? Increasingly? And Does the Answer Still Depend on Type?
According to conventional wisdom, capital flows are fickle. Focusing on emerging markets, this paper asks whether this conventional wisdom still holds in the contemporary world. The results show that, despite recent structural and regulatory change...
| Main Authors: | , , |
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2017
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/195801487166902153/Are-capital-flows-fickle-Increasingly-and-does-the-answer-still-depend-on-type http://hdl.handle.net/10986/26140 |
| Summary: | According to conventional wisdom,
capital flows are fickle. Focusing on emerging markets, this
paper asks whether this conventional wisdom still holds in
the contemporary world. The results show that, despite
recent structural and regulatory changes, much of it
survives. FDI inflows are more stable than non-FDI inflows.
Within non-FDI inflows, portfolio debt and
bank-intermediated flows remain the most volatile. While FDI
inflows are driven mainly by pull factors, portfolio debt
and equity are driven mainly by push factors; and
bank-intermediated flows are driven by a combination of push
and pull factors. But capital outflows from emerging markets
behave differently. FDI outflows from emerging markets have
grown and become significantly more volatile. There is
similarly an increase in the volatility of
bank-intermediated capital outflows from emerging markets.
The findings underscore that outflows from emerging markets,
both FDI and bank-related flows, have come to play a growing
role and warrant greater attention from analysts and policy makers. |
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