Capital Controls and the Cost of Debt

Author/Editor:

Eugenia Andreasen ; Martin Schindler ; Patricio A Valenzuela

Publication Date:

June 9, 2017

Electronic Access:

Free Full text (PDF file size is 459 KB).Use the free Adobe Acrobat Reader to view this PDF file

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary:

Using a panel data set for international corporate bonds and capital account restrictions in advanced and emerging economies, we show that restrictions on capital inflows produce a substantial and economically meaningful increase in corporate bond spreads. A number of heterogeneities suggest that the effect of capital controls on inflows is particularly strong for more financially constrained firms, establishing a novel channel through which capital controls affect economic outcomes. By contrast, we do not find a robust significant effect of restrictions on outflows.

Series:

Working Paper No. 17/135

English

Publication Date:

June 9, 2017

ISBN/ISSN:

9781484303313/1018-5941

Stock No:

WPIEA2017135

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

26

Please address any questions about this title to publications@imf.org