Malaysian Capital Controls: Macroeconomics and Institutions

Simon Johnson, Todd Mitton, Kalpana Kochhar and Natalia Tamirisa ()

No 06/51, IMF Working Papers from International Monetary Fund

Abstract: We analyze the capital controls imposed in Malaysia in September 1998. In macroeconomic terms, these controls neither yielded major benefits nor were costly. At the same time, the stock market interpreted the capital controls (and associated events) as favoring firms with stronger political connections, and some connected firms reportedly received advantages immediately following the crisis. Analysis of financial accounts indicates that connected firms outperformed unconnected firms before the 1997-98 crisis but not afterward. After the crisis, connected firms were either not supported as much as the market had expected or the benefits they received were not manifest in their published accounts.

Keywords: Capital controls; Malaysia; Financial crisis; Political economy; Stock markets (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dev, nep-fdg, nep-fmk and nep-mac
Date: 2006-03-07
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Chapter: Malaysian Capital Controls: Macroeconomics and Institutions (2007)
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