Sailing through this Storm? Capital Flows in Asia during the Crisis

Tille, Cédric

doi:10.2139/ssrn.1895973

Cited by 10 publications

(8 citation statements)

References 14 publications

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“…The topic of financial crises and FDI is an important and timely one today given recent global financial turmoil (Tille, 2012). The findings of the paper are relevant not only because they evaluate the effects of crises on FDI, but because they inform us about the types of crises that these countries are experiencing (or are at least perceived to be experiencing).…”

Section: Discussionmentioning

confidence: 99%

Fire‐sale FDI? The Impact of Financial Crises on Foreign Direct Investment

Stoddard

Noy

2015

Review Development Economics

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In this paper, we analyze the evolution of foreign direct investment (FDI) inflows to developing and emerging countries around financial crises. We empirically and thoroughly examine the Fire-Sale FDI hypothesis and describe the pattern of FDI inflows surrounding financial crises. We also add a more granular detail about the types of financial crises and their potentially differential effects on FDI. We distinguish between Mergers and Acquisitions (M&A) and Greenfield investment, as well as between different motivations for FDI-horizontal (tariff jumping) and vertical (integrating production stages). We find that financial crises have a strong negative effect on inward FDI in our sample. Crises are also shown to reduce the value of horizontal and vertical FDI. We do not find empirical evidence of Fire-Sale FDI. On the contrary, financial crises are shown to affect FDI flows and M&A activity adversely. Classification: F21, F23, F29, G01, G34 JEL

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Section: Discussionmentioning

confidence: 99%

Fire‐sale FDI? The Impact of Financial Crises on Foreign Direct Investment

Stoddard

Noy

2015

Review Development Economics

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“…Capital inflows and their effects are emerging as major issues of interest for Asian policy-makers in the aftermath of the global crisis. 9 Table 10 shows the summary statistics of Asian developing countries and compares them with those 9 See, for example, Tille (2012) and Rime and Tranvag (2012). The dependent variable is the average of the crisis dummy in developing countries for each decade: 1970s, 1980s, 1990s and 2000s.…”

Section: Implication For Asian Countriesmentioning

confidence: 99%

Capital Market Openness and Output Volatility

Hwang

Park

Shin³

2013

Pacific Economic Review

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In this paper, using data from 21 advanced and 81 developing countries during 1971–2010, we empirically examine the impact of capital market openness on output volatility. We find that opening of capital markets increases the output volatility of developing countries. Furthermore, we find that the main channel through which capital market openness increases volatility is currency and external‐debt crisis. Finally, we find that while Asian countries are less likely to experience a crisis, they become even more unstable than other developing countries once a crisis occurs. Our evidence strengthens the case for caution in developing countries' opening up of their capital markets.

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“…Durdu et al (2013) provide a framework connecting sovereign default risk with the news shocks about economic fundamentals. 5 See also Tille (2012) on the factors determining capital flows episode in Asia during the crisis.…”

Section: Introductionmentioning

confidence: 99%

Fundamentals and Sovereign Risk of Emerging Markets

Aizenman

Jinjarak

Park

2016

Pacific Economic Review

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We empirically assess the relative importance of various economic fundamentals in accounting for the sovereign credit default swap (CDS) spreads of emerging markets during 2004-2012, which encompasses the global financial crisis of 2008-2009. Inflation, state fragility, external debt and commodity terms of trade volatility were positively associated, while trade openness and a more favourable fiscal balance/GDP ratio were negatively associated with sovereign CDS spreads. Yet the relative importance of economic fundamentals in the pricing of sovereign risk varies over time. The key factors are trade openness and state fragility in the pre-crisis period, the external debt/GDP ratio and inflation in the crisis period, and inflation and the public debt/GDP ratio in the post-crisis period. Asian countries enjoy lower sovereign spreads than Latin American countries, and this gap widened during and after the crisis. Trade openness was the biggest factor behind Asia's lower sovereign spreads before the crisis, and inflation during and after the crisis. The results imply that external factors were paramount in pricing sovereign risk prior to the crisis, but internal factors associated with the capacity to adjust to adverse shocks gained prominence during and after the crisis.

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Sailing through this Storm? Capital Flows in Asia during the Crisis

Cited by 10 publications

References 14 publications

Fire‐sale FDI? The Impact of Financial Crises on Foreign Direct Investment

Fire‐sale FDI? The Impact of Financial Crises on Foreign Direct Investment

Capital Market Openness and Output Volatility

Fundamentals and Sovereign Risk of Emerging Markets

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