Capital Controls and the Cost of Debt
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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. 2017/135
Subject:
Balance of payments Bonds Capital account Capital controls Corporate bonds Financial institutions Financial services Yield curve
English
Publication Date:
June 9, 2017
ISBN/ISSN:
9781484303313/1018-5941
Stock No:
WPIEA2017135
Pages:
26
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