What Types of Capital Flows Help Improve International Risk Sharing?
Cross-border capital flows are expected to lead to increased international risk sharing by facilitating borrowing and lending in global financial markets. This paper examines risk-sharing outcomes of various types of capital flows (foreign direct i...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2021
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/undefined/227711636987478555/What-Types-of-Capital-Flows-Help-Improve-International-Risk-Sharing http://hdl.handle.net/10986/36599 |
| Summary: | Cross-border capital flows are
expected to lead to increased international risk sharing by
facilitating borrowing and lending in global financial
markets. This paper examines risk-sharing outcomes of
various types of capital flows (foreign direct investment,
portfolio equity, debt, remittance, and aid flows) in a
large sample of emerging market and developing economies.
The results suggest that remittances and aid flows are
associated with increased international risk sharing. Other
types of capital flows are not consistently correlated with
better risk-sharing outcomes. These findings are robust to
the use of different econometric specifications,
country-specific characteristics, and other controls. |
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