Trade in Financial Services and Capital Movements
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Summary:
International financial liberalization may alter saving-investment imbalances and patterns of capital flows across countries. In a panel of OECD countries for 1990–96, this study examines how the liberalization of capital movements and financial services trade affects net private capital flows. Capital inflows tend to fall (rise) with the liberalization of commercial presence in banking and securities (insurance) services, possibly reflecting an increase (decrease) in saving. Capital account liberalization is found to stimulate capital inflows, suggesting that better access to external financing helps sustain larger fiscal and current account deficits. When cross-border trade is liberalized, capital flows change insignificantly.
Series:
Working Paper No. 1999/089
Subject:
Balance of payments Capital controls Capital flows Capital inflows Financial services International trade Trade in services
English
Publication Date:
July 1, 1999
ISBN/ISSN:
9781451851267/1018-5941
Stock No:
WPIEA0891999
Pages:
22
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