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

By Mahir Binici, Michael M. Hutchison, Martin Schindler

September 1, 2009

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Format: Chicago

Mahir Binici, Michael M. Hutchison, and Martin Schindler. Controlling Capital? Legal Restrictions and the Asset Composition of International Financial Flows, (USA: International Monetary Fund, 2009) accessed September 20, 2024

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.

Subject: Capital controls, Capital flows, Capital inflows, Capital outflows, Stocks

Keywords: Capital control, Capital flow, Capital outflow, Controls measure, Stock market cap., WP

Publication Details

Pages:

32
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2009/208
Stock No:

WPIEA2009208
ISBN:

9781451873559
ISSN:

1018-5941

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