Author: Kinga Z. Elo
Publisher: International Monetary Fund
ISBN:
Category : Business & Economics
Languages : en
Pages : 68
Book Description
This paper examines how capital controls affect FDI decisions and how the impact of these restrictive measures varies with different levels of country risk. We construct a model of firms' FDI decisions, broadly in Dunning's "eclectic theory" framework, using "real options" to emphasize economic uncertainty and country risk. Numerical results of the model take the form of "quality statistics" that uncover the underlying dynamics hidden in the aggregate data that is responsible for the low performance of recent empirical studies. We find that increasing levels of capital controls reduce the life-span of FDI investments at each level of country risk and foreign investors' willingness towards risk sharing increases. We reveal a significant interaction between capital control and country risk, resulting in a nonlinear relationship between these and the volatility and volume statistics. We estimate a standard cross-sectional model that provides strong support for our theoretical findings.
The Effect of Capital Controls on Foreign Direct Investment Decisions Under Country Risk with Intangible Assets
Author: Kinga Z. Elo
Publisher: International Monetary Fund
ISBN:
Category : Business & Economics
Languages : en
Pages : 68
Book Description
This paper examines how capital controls affect FDI decisions and how the impact of these restrictive measures varies with different levels of country risk. We construct a model of firms' FDI decisions, broadly in Dunning's "eclectic theory" framework, using "real options" to emphasize economic uncertainty and country risk. Numerical results of the model take the form of "quality statistics" that uncover the underlying dynamics hidden in the aggregate data that is responsible for the low performance of recent empirical studies. We find that increasing levels of capital controls reduce the life-span of FDI investments at each level of country risk and foreign investors' willingness towards risk sharing increases. We reveal a significant interaction between capital control and country risk, resulting in a nonlinear relationship between these and the volatility and volume statistics. We estimate a standard cross-sectional model that provides strong support for our theoretical findings.
Publisher: International Monetary Fund
ISBN:
Category : Business & Economics
Languages : en
Pages : 68
Book Description
This paper examines how capital controls affect FDI decisions and how the impact of these restrictive measures varies with different levels of country risk. We construct a model of firms' FDI decisions, broadly in Dunning's "eclectic theory" framework, using "real options" to emphasize economic uncertainty and country risk. Numerical results of the model take the form of "quality statistics" that uncover the underlying dynamics hidden in the aggregate data that is responsible for the low performance of recent empirical studies. We find that increasing levels of capital controls reduce the life-span of FDI investments at each level of country risk and foreign investors' willingness towards risk sharing increases. We reveal a significant interaction between capital control and country risk, resulting in a nonlinear relationship between these and the volatility and volume statistics. We estimate a standard cross-sectional model that provides strong support for our theoretical findings.
The Effect of Capital Controls on Foreign Direct Investment Decisions Under Country Risk with Intagible Assets
Author: Kinga Z. Elo
Publisher:
ISBN:
Category : Capital investments
Languages : en
Pages : 62
Book Description
Publisher:
ISBN:
Category : Capital investments
Languages : en
Pages : 62
Book Description
Capital Controls
Author: Ms.Inci Ötker
Publisher: International Monetary Fund
ISBN: 1557758743
Category : Business & Economics
Languages : en
Pages : 135
Book Description
This paper examines country experiences with the use and liberalization of capital controls to develop a deeper understanding of the role of capital controls in coping with volatile capital flows, as well as the issues surrounding their liberalization. Detailed analyses of country cases aim to shed light on the motivations to limit capital flows; the role the controls may have played in coping with particular situations, including in financial crises and in limiting short-term inflows; the nature and design of the controls; and their effectivenes and potential costs. The paper also examines the link between prudential policies and capital controls and illstrates the ways in which better prudential practices and accelerated financial reforms could address the risks in cross-border capital transactions.
Publisher: International Monetary Fund
ISBN: 1557758743
Category : Business & Economics
Languages : en
Pages : 135
Book Description
This paper examines country experiences with the use and liberalization of capital controls to develop a deeper understanding of the role of capital controls in coping with volatile capital flows, as well as the issues surrounding their liberalization. Detailed analyses of country cases aim to shed light on the motivations to limit capital flows; the role the controls may have played in coping with particular situations, including in financial crises and in limiting short-term inflows; the nature and design of the controls; and their effectivenes and potential costs. The paper also examines the link between prudential policies and capital controls and illstrates the ways in which better prudential practices and accelerated financial reforms could address the risks in cross-border capital transactions.
Foreign Direct Investment Decisions with Country Risk and Barriers to Capital Movements
Author: Kinga Zsuzsanna Elo
Publisher:
ISBN:
Category : Capital movements
Languages : en
Pages : 242
Book Description
Publisher:
ISBN:
Category : Capital movements
Languages : en
Pages : 242
Book Description
Risk and Foreign Direct Investment
Author: C. White
Publisher: Springer
ISBN: 0230624839
Category : Business & Economics
Languages : en
Pages : 274
Book Description
Incorporating an accurate measure of risk is important to the appraisal of an international investment. This book examines and recommends how decisions on international investment projects are made. Critiquing and integrating existing theory, it shows how risk can be incorporated into the present value formula produce a clear decision rule.
Publisher: Springer
ISBN: 0230624839
Category : Business & Economics
Languages : en
Pages : 274
Book Description
Incorporating an accurate measure of risk is important to the appraisal of an international investment. This book examines and recommends how decisions on international investment projects are made. Critiquing and integrating existing theory, it shows how risk can be incorporated into the present value formula produce a clear decision rule.
Controlling Capital? Legal Restrictions and the Asset Composition of International Financial Flows
Author: Mr.Martin Schindler
Publisher: International Monetary Fund
ISBN: 1451873557
Category : Business & Economics
Languages : en
Pages : 34
Book Description
How effective are capital account restrictions? We provide new answers based on a novel panel data set of capital controls, disaggregated by asset class and by inflows/outflows, covering 74 countries during 1995-2005. We find the estimated effects of capital controls to vary markedly across the types of capital controls, both by asset categories, by the direction of flows, and across countries' income levels. In particular, both debt and equity controls can substantially reduce outflows, with little effect on capital inflows, but only high-income countries appear able to effectively impose debt (outflow) controls. The results imply that capital controls can affect both the volume and the composition of capital flows.
Publisher: International Monetary Fund
ISBN: 1451873557
Category : Business & Economics
Languages : en
Pages : 34
Book Description
How effective are capital account restrictions? We provide new answers based on a novel panel data set of capital controls, disaggregated by asset class and by inflows/outflows, covering 74 countries during 1995-2005. We find the estimated effects of capital controls to vary markedly across the types of capital controls, both by asset categories, by the direction of flows, and across countries' income levels. In particular, both debt and equity controls can substantially reduce outflows, with little effect on capital inflows, but only high-income countries appear able to effectively impose debt (outflow) controls. The results imply that capital controls can affect both the volume and the composition of capital flows.
Capital Controls and International Portfolio Theory
Author: Ms.Marjorie B. Rose
Publisher: International Monetary Fund
ISBN: 1451970579
Category : Business & Economics
Languages : en
Pages : 24
Book Description
This paper examines the effects of capital controls on asset prices. A closed-form valuation model by Eun and Janakirimanan (1986) is extended to analyze the impact of three restrictions on international portfolio investment: a percentage quantity constraint on the amount of foreign securities a domestic resident may hold in her portfolio; a constraint on the absolute amount of foreign securities a domestic resident may hold; and a percentage tax on the domestic purchase price of a foreign security. Comparative statics and numerical analysis are used to reveal the effects of these distortions on domestic and world equilibrium prices.
Publisher: International Monetary Fund
ISBN: 1451970579
Category : Business & Economics
Languages : en
Pages : 24
Book Description
This paper examines the effects of capital controls on asset prices. A closed-form valuation model by Eun and Janakirimanan (1986) is extended to analyze the impact of three restrictions on international portfolio investment: a percentage quantity constraint on the amount of foreign securities a domestic resident may hold in her portfolio; a constraint on the absolute amount of foreign securities a domestic resident may hold; and a percentage tax on the domestic purchase price of a foreign security. Comparative statics and numerical analysis are used to reveal the effects of these distortions on domestic and world equilibrium prices.
Capital Controls, Liberalizations, and Foreign Direct Investment
Author: Mihir A. Desai
Publisher:
ISBN:
Category : Capital market
Languages : en
Pages : 50
Book Description
"Affiliate-level evidence indicates that American multinational firms circumvent capital controls by adjusting their reported intrafirm trade, affiliate profitability, and dividend repatriations. As a result, the reported profit impact of local capital controls is comparable to the effect of 24 percent higher corporate tax rates, and affiliates located in countries imposing capital controls are 9.8 percent more likely than other affiliates to remit dividends to parent companies. Multinational affiliates located in countries with capital controls face 5.4 percent higher interest rates on local borrowing than do affiliates of the same parent borrowing locally in countries without capital controls. Together, the costliness of avoidance and higher interest rates raise the cost of capital, significantly reducing the level of foreign direct investment. American affiliates are 13-16 percent smaller in countries with capital controls than they are in comparable countries without capital controls. These effects are reversed when countries liberalize their capital account restrictions"--NBER website
Publisher:
ISBN:
Category : Capital market
Languages : en
Pages : 50
Book Description
"Affiliate-level evidence indicates that American multinational firms circumvent capital controls by adjusting their reported intrafirm trade, affiliate profitability, and dividend repatriations. As a result, the reported profit impact of local capital controls is comparable to the effect of 24 percent higher corporate tax rates, and affiliates located in countries imposing capital controls are 9.8 percent more likely than other affiliates to remit dividends to parent companies. Multinational affiliates located in countries with capital controls face 5.4 percent higher interest rates on local borrowing than do affiliates of the same parent borrowing locally in countries without capital controls. Together, the costliness of avoidance and higher interest rates raise the cost of capital, significantly reducing the level of foreign direct investment. American affiliates are 13-16 percent smaller in countries with capital controls than they are in comparable countries without capital controls. These effects are reversed when countries liberalize their capital account restrictions"--NBER website
Liberalization of the Capital Account
Author: Mr.Donald J. Mathieson
Publisher: International Monetary Fund
ISBN: 1451973756
Category : Business & Economics
Languages : en
Pages : 60
Book Description
This paper reviews the experience with capital controls in industrial and developing countries, considers the policy issues raised when the effectiveness of capital controls diminishes, examines the medium-term benefits and costs of an open capital account, and analyzes the policy measures that could help sustain capital account convertibility. As the effectiveness of capital controls eroded more rapidly in the 1980s than in earlier periods, new constraints were placed on the formulation of stabilization and structural reform programs. However, experience suggests that certain macroeconomic, financial, and risk management policies would allow countries to attain the benefits of capital account convertibility and reduce the financial risks created by an open capital account.
Publisher: International Monetary Fund
ISBN: 1451973756
Category : Business & Economics
Languages : en
Pages : 60
Book Description
This paper reviews the experience with capital controls in industrial and developing countries, considers the policy issues raised when the effectiveness of capital controls diminishes, examines the medium-term benefits and costs of an open capital account, and analyzes the policy measures that could help sustain capital account convertibility. As the effectiveness of capital controls eroded more rapidly in the 1980s than in earlier periods, new constraints were placed on the formulation of stabilization and structural reform programs. However, experience suggests that certain macroeconomic, financial, and risk management policies would allow countries to attain the benefits of capital account convertibility and reduce the financial risks created by an open capital account.
The Impact of Controlson Capital Movementson the Private Capital Accounts of Countries' Balance of Payments
Author: Mr.R. B. Johnston
Publisher: International Monetary Fund
ISBN: 1451956207
Category : Business & Economics
Languages : en
Pages : 46
Book Description
This paper reports research on the impact of controls on capital movements on the private capital accounts of countries’ balance of payments using data drawn from 52 countries for the period 1985-92. The results indicate that: (1) capital controls operated by developing countries have not been effective in insulating the private capital accounts of these countries’ balance of payments, and (2) capital controls operated by industrial countries significantly affected the structure of their capital flows mainly by inhibiting net foreign direct and portfolio investment outflows. The results, which are consistent with other observations, raise issues for the policy toward the maintenance and liberalization of controls on capital movements by developing countries.
Publisher: International Monetary Fund
ISBN: 1451956207
Category : Business & Economics
Languages : en
Pages : 46
Book Description
This paper reports research on the impact of controls on capital movements on the private capital accounts of countries’ balance of payments using data drawn from 52 countries for the period 1985-92. The results indicate that: (1) capital controls operated by developing countries have not been effective in insulating the private capital accounts of these countries’ balance of payments, and (2) capital controls operated by industrial countries significantly affected the structure of their capital flows mainly by inhibiting net foreign direct and portfolio investment outflows. The results, which are consistent with other observations, raise issues for the policy toward the maintenance and liberalization of controls on capital movements by developing countries.