Financial openness, policy vs. realized outcomes

Arbeitspapier

This paper examines how the 1990s capital account liberalization policy trend affected international capital flows, and tests a new hypothesis that the depth and efficiency of the domestic financial system impacts the efficacy of capital account policy. The paper exploits a recently published IMF database on financial development that spans the period 1980-2014 and includes both developing and developed countries. The results confirm that policy on average does not have a significant effect on gross capital flows, when controlling for other factors. I also find no effect on flows disaggregated by type and direction. However, interacting capital account policy and financial development, I do find that for financially developed countries, policy has the expected effect - policy openness leads to capital flows. The implication is that the effectiveness of capital account liberalization requires developing the domestic financial system.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Papers ; No. 2018-04

Classification and Topics

• Classification: Wirtschaft
• Subject: financial globalization ; financial integration ; financial development ; capital flows ; capital control measures

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Ramsay Bush, Georgia
• Event: Veröffentlichung
• (who): Banco de México
• (where): Ciudad de México
• (when): 2018

Further information

• Handle: http://hdl.handle.net/10419/202470
• Last update: 10.03.2025, 11:42 AM CET