## Regulating Capital Flows at Both Ends: Does it Work?

_IMF Working Papers, October 17, 2014_

## Source details

**Canonical URL:** [Regulating Capital Flows at Both Ends: Does it Work?](https://www.imf.org/en/publications/wp/issues/2016/12/31/regulating-capital-flows-at-both-ends-does-it-work-42400)

## Other formats

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## Bibliographic details
- Authors: Atish R. Ghosh, Mahvash S Qureshi, Naotaka Sugawara
- Published: October 17, 2014
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781498358743.001

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### Research question and scope
- Examines whether cross-border capital flows can be regulated by imposing capital account restrictions (CARs) in both source and recipient countries.
- Historical inspiration: original advocacy by John Maynard Keynes and Harry Dexter White.
- Sample and timeframe:
  - Bilateral cross-border bank flows from 31 source to 76 recipient (advanced and emerging market) countries.
  - Period: 1995–2012.

### Data and methodology
- Combines bilateral cross-border bank flow data with a new and comprehensive dataset on various outflow and inflow related capital controls and prudential measures in the sampled countries.
- Focus: impact of CARs and prudential measures on the volume of cross-border bank flows.

### Key findings
- CARs at either end (source or recipient) can significantly influence the volume of cross-border bank flows.
- Restrictions imposed at both ends are associated with a larger reduction in flows than restrictions at only one end.
- Evidence of cross-border spillovers:
  - Inflow restrictions imposed by countries are associated with larger flows to other countries (i.e., diversion effects).

### Policy implications and recommendations
- Findings suggest useful scope for policy coordination:
  - Between source and recipient countries to better manage potentially disruptive flows.
  - Among recipient countries to address spillovers and diversion effects.
- Coordination could improve management of cross-border banking flows and reduce unintended redirection of capital.

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## Content in this bundle

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/regulating-capital-flows-at-both-ends-does-it-work-42400_