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Capital Flows at Risk: Taming the Ebbs and Flows

Author : Mr.R. G Gelos

Publisher : International Monetary Fund

Page : 44 pages

File Size : 27,35 MB

Release : 2019-12-20

Category : Business & Economics

ISBN : 1513522906

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Book Description

The volatility of capital flows to emerging markets continues to pose challenges to policymakers. In this paper, we propose a new framework to answer critical policy questions: What policies and policy frameworks are most effective in dampening sharp capital flow movements in response to global shocks? What are the near- versus medium-term trade-offs of different policies? We tackle these questions using a quantile regression framework to predict the entire future probability distribution of capital flows to emerging markets, based on current domestic structural characteristics, policies, and global financial conditions. This new approach allows policymakers to quantify capital flows risks and evaluate policy tools to mitigate them, thus building the foundation of a risk management framework for capital flows.



Bank Leverage and Monetary Policy's Risk-Taking Channel

Author : Mr.Giovanni Dell'Ariccia

Publisher : International Monetary Fund

Page : 41 pages

File Size : 48,95 MB

Release : 2013-06-06

Category : Business & Economics

ISBN : 1484381130

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Book Description

We present evidence of a risk-taking channel of monetary policy for the U.S. banking system. We use confidential data on the internal ratings of U.S. banks on loans to businesses over the period 1997 to 2011 from the Federal Reserve’s survey of terms of business lending. We find that ex-ante risk taking by banks (as measured by the risk rating of the bank’s loan portfolio) is negatively associated with increases in short-term policy interest rates. This relationship is less pronounced for banks with relatively low capital or during periods when banks’ capital erodes, such as episodes of financial and economic distress. These results contribute to the ongoing debate on the role of monetary policy in financial stability and suggest that monetary policy has a bearing on the riskiness of banks and financial stability more generally.



Managing Elevated Risk

Author : Iwan J. Azis

Publisher : Springer

Page : 129 pages

File Size : 41,69 MB

Release : 2014-12-11

Category : Business & Economics

ISBN : 9812872841

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Book Description

This book discusses the risks and opportunities that arise in Emerging Asia given the context of a new environment in global liquidity and capital flows. It elaborates on the need to ensure financial and overall economic stability in the region through improved financial regulation and other policy measures to minimize the emergent risks. "Managing Elevated Risk: Global Liquidity, Capital Flows, and Macroprudential Policy—An Asian Perspective" also explores the range of policy options that may be deployed to address the impact of global liquidity on domestic financial and socio-economic conditions including income inequality. The book is primarily aimed at policy makers, financial market regulators and supervisory agencies to help them improve national regulatory systems and to promote harmonization of national regulations and practices in line with global standards. Scholars and researchers will also gain important information and knowledge about the overall impacts of changing global liquidity from the book.



Capital Flows and Financial Crises

Author : Miles Kahler

Publisher : Cornell University Press

Page : 284 pages

File Size : 10,30 MB

Release : 2018-09-05

Category : Political Science

ISBN : 1501731408

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Book Description

Capital flows to the developing economies have long displayed a boom-and-bust pattern. Rarely has the cycle turned as abruptly as it did in the 1990s, however: surges in lending were followed by the Mexican peso crisis of 1994-95 and the sudden collapse of currencies in Asia in 1997. This volume maps a new and uncertain financial landscape, one in which volatile private capital flows and fragile banking systems produce sudden reversals of fortune for governments and economies. This environment creates dilemmas for both national policymakers who confront the "mixed blessing" of capital inflows and the international institutions that manage the recurrent crises.The authors—leading economists and political scientists—examine private capital flows and their consequences in Latin America, Pacific Asia, and East Europe, placing current cycles of lending in historical perspective. National governments have used a variety of strategies to deal with capital-account instability. The authors evaluate those responses, prescribe new alternatives, and consider whether the new circumstances require novel international policies.



Managing Capital Flows

Author : Masahiro Kawai

Publisher : Edward Elgar Publishing

Page : 465 pages

File Size : 36,37 MB

Release : 2010-01-01

Category : Business & Economics

ISBN : 184980687X

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Book Description

Managing Capital Flows provides analyses that can help policymakers develop a framework for managing capital flows that is consistent with prudent macroeconomic and financial sector stability. While capital inflows can provide emerging market economies with invaluable benefits in pursuing economic development and growth, they can also pose serious policy challenges for macroeconomic management and financial sector supervision. The expert contributors cover a wide range of issues related to managing capital flows and analyze the experience of emerging Asian economies in dealing with surges in capital inflows. They also discuss possible policy measures to manage capital flows while remaining consistent with the goals of macroeconomic and financial sector stability. Building on this analysis, the book presents options for workable national policies and regional policy cooperation, particularly in exchange rate management. Containing chapters that bring in international experiences relevant to Asia and other emerging market economies, this insightful book will appeal to policymakers in governments and financial institutions, as well as public and private finance experts. It will also be of great interest to advanced students and academic researchers in finance.



International Capital Flow Pressures

Author : Ms.Linda S. Goldberg

Publisher : International Monetary Fund

Page : 58 pages

File Size : 18,10 MB

Release : 2018-02-16

Category : Business & Economics

ISBN : 1484341805

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Book Description

This paper presents a new measure of capital flow pressures in the form of a recast Exchange Market Pressure index. The measure captures pressures that materialize in actual international capital flows as well as pressures that result in exchange rate adjustments. The formulation is theory-based, relying on balance of payments equilibrium conditions and international asset portfolio considerations. Based on the modified exchange market pressure index, the paper also proposes the Global Risk Response Index, which reflects the country-specific sensitivity of capital flow pressures to measures of global risk aversion. For a large sample of countries over time, we demonstrate time variation in the effects of global risk on exchange market pressures, the evolving importance of the global factor across types of countries, and the changing risk-on or risk-off status of currencies.



Policy Responses to Capital Flows in Emerging Markets

Author : Mahmood Pradhan

Publisher : International Monetary Fund

Page : 45 pages

File Size : 44,95 MB

Release : 2011-04-20

Category : Business & Economics

ISBN : 1463935129

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Book Description

Staff Discussion Notes showcase the latest policy-related analysis and research being developed by individual IMF staff and are published to elicit comment and to further debate. These papers are generally brief and written in nontechnical language, and so are aimed at a broad audience interested in economic policy issues. This Web-only series replaced Staff Position Notes in January 2011.



Gross Private Capital Flows to Emerging Markets

Author : Erlend Nier

Publisher : International Monetary Fund

Page : 35 pages

File Size : 18,56 MB

Release : 2014-10-27

Category : Business & Economics

ISBN : 1498352928

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Book Description

This paper assesses empirically the key drivers of private capital flows to a large sample of emerging market economies in the last decade. It analyzes the effect of the global financial cycle, measured by the VIX, on capital flows and investigates the role of fundamentals and country characteristics in mitigating or amplifying its effect. Using interaction models, we find the effect of the VIX to be non-linear. For low levels of the VIX, capital flows are driven by fundamental factors. During periods of stress, the VIX becomes the dominant driver of capital flows while other determinants, with the exception of interest rate differentials, lose statistical significance. Our results also suggest that the effect of global financial conditions on gross private capital flows increases with the host country’s level of financial sector development. Finally, our results imply that countries cannot fully insulate themselves from global financial shocks, unless creating a fragmented global financial system.



Push Factors and Capital Flows to Emerging Markets

Author : Mr.Eugenio Cerutti

Publisher : International Monetary Fund

Page : 43 pages

File Size : 20,45 MB

Release : 2015-06-22

Category : Business & Economics

ISBN : 1513526634

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Book Description

This paper analyzes the behavior of gross capital inflows across 34 emerging markets (EMs). We first confirm that aggregate inflows to EMs co-move considerably. We then report three findings: (i) the aggregate co-movement conceals significant heterogeneity across asset types as only bank-related and portfolio bond and equity inflows do co-move; (ii) while global push factors in advanced economies mostly explain the common dynamics, their relative importance varies by type of flow; and (iii) the sensitivity to common dynamics varies significantly across borrower countries, with market structure characteristics (especially the composition of the foreign investor base and the level of liquidity) rather than borrower country’s institutional fundamentals strongly affecting sensitivities. Countries relying more on international funds and global banks are found to be more sensitive to push factors. Our findings suggest that EMs need to closely monitor their lenders and investors to assess their inflow exposures to global push factors.



Managing Volatile Capital Flows: Experiences and Lessons for Sub-Saharan African Frontier Markets

Author : Cheikh A. Gueye

Publisher : International Monetary Fund

Page : 39 pages

File Size : 46,49 MB

Release : 2014-03-26

Category : Business & Economics

ISBN : 1616358440

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Book Description

During the past three years the frontier markets of sub-Saharan Africa have received growing amounts of portfolio capital flows, with heightened interest from foreign investors. Compared with foreign direct investment, portfolio capital flows tend to be more volatile, and thus pose challenges for sub-Saharan African frontier markets. This study examines the evolution of capital flows since 2010 and discusses the policies these countries have designed to reduce risks from the inherent volatility of these flows.