Opening Up: Capital Flows and Financial Sector Dynamics in Low-Income Developing Countries
IMF Working Papers, September 24, 2021
Source details
- Canonical URL
- Opening Up: Capital Flows and Financial Sector Dynamics in Low-Income Developing Countries
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Bibliographic details
- Authors: Sebastian Horn, Futoshi Narita
- Published: September 24, 2021
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781513597720.001
Key findings
- Over the past two decades, many low-income developing countries have substantially increased openness towards external financing and have received large capital inflows.
- Capital inflows have been associated with financial deepening through increases in:
- bank loans,
- deposits,
- wholesale funding.
- Domestic banks increase loans more than foreign banks.
- There are only modest signs of a build-up in financial vulnerabilities.
- Evidence points toward limited global push effects and highlights the importance of domestic pull factors.
Methodology and identification
- Analysis uses bank-level micro data.
- Causality is examined through:
- an instrumental variable approach,
- an augmented inverse-probability weighting estimator.
Subject tags and scope
- Subjects: Balance of payments; Capital flows; Capital inflows; Economic and financial statistics; Financial institutions; Financial sector policy and analysis; Financial sector risk; Financial statistics; Loans.
- Keywords: bank characteristic; Capital flows; Capital inflows; Commonwealth and Development Office; Financial sector risk; Financial statistics; Global; Loans; low-income developing countries; micro data; research project; U.K.'s Foreign.
Content in this bundle
- Working Paper