Financial Globalization and the Russian Crisis of 1998

Taming Capital Flows

“…Others in between these two opposing views argue that capital openness has benefits as well as costs, and the benefits are largest when countries achieve a certain threshold level of institutional development. 6 Capital flow liberalization has often been followed by financial crises, as is discussed in Demirgüç- Kunt andDetragiache (1998), Dell' Arricia et al (2008) and Pinto and Ulatov (2010). Therefore, countries have started to implement capital flow measures (CFMs) in order to prevent the negative effects of the volatility of short-term capital flows.…”