What drives portfolio investments of German banks in emerging capital markets?

Arbeitspapier

After decades of steady liberalisation and financial market development, emerging capital markets experienced unparalleled capital inflows in the aftermath of the emerging markets crisis in the 1990s. This paper studies portfolio investment decisions of German banks in 30 emerging capital markets using monthly data from 2002 to 2007. The use of a dynamic Time-Series Cross-Section framework and the micro database External Position Report provided by Deutsche Bundesbank, which covers German banks assets and liability positions vis-à-vis foreign countries, allows insights into the various determinants: indicators of financial market development, the portfolio-calculus of investors, investor-specific characteristics, as well as the macroeconomic environment. There is evidence for German banks taking into account the various dimensions of financial market development in their portfolio investment decisions and anticipating the special risks inherent in emerging markets. The implication for policymakers would be to foster financial market development in order to attract and sustain international portfolio investors. However, there is additional evidence for the investor's domestic market environment and global risk aversion exerting a significant influence in times of financial turmoil.

Object Details

• ISBN: 978-3-86558-617-9
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Discussion Paper Series 2 ; No. 2010,04

Classification and Topics

• Classification: Wirtschaft ; Single Equation Models; Single Variables: Panel Data Models; Spatio-temporal Models ; Current Account Adjustment; Short-term Capital Movements ; Portfolio Choice; Investment Decisions ; Economic Development: Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
• Subject: Emerging capital markets ; financial market development ; portfolio investment ; international capital flows ; Bank ; Portfolio-Investition ; Deutsch ; Aufstrebende Märkte ; Deutschland ; Schwellenländer

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Wildmann, Christian
• Event: Veröffentlichung
• (who): Deutsche Bundesbank
• (where): Frankfurt a. M.
• (when): 2010

Further information

• Handle: http://hdl.handle.net/10419/36662
• Last update: 10.03.2025, 11:43 AM CET