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Controlling Capital? Legal Restrictions and the Asset Composition of International Financial Flows

Author/Editor: Binici, Mahir | Hutchison, Michael | Schindler, Martin
Authorized for Distribution: September 1, 2009
Electronic Access: Free Full Text (PDF file size is 667KB)
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.

Summary: 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.
 
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Series: Working Paper No. 09/208
Subject(s): Asset management | Capital account | Capital controls | Capital flows | Cross country analysis | Economic integration | Globalization | Time series
Author's keyword(s): Capital controls; capital flows; financial integration
 
English  
    Published:   September 1, 2009        
            Format:   Paper
    Stock No:   WPIEA2009208   Pages:   32
    Price:   US$18.00 (Academic Rate: US$18.00 )
       
     
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