Financial flows, global interest rates, and political integration

Jun Nagayasu

Finance Research Letters, 2019, vol. 31, issue C

Abstract: This paper empirically analyzes international financial flows using data from 2000 to 2016. Using a factor model to calculate a proxy for global interest rates, we confirm that national real interest rates include global elements, particularly those of advanced countries. Thus, interest rate differentials have no significant influence on the financial flows of advanced countries. On the other hand, we find that exchange rates and political integration more consistently influence investment decisions on forming financial portfolios than interest rates.

Keywords: Financial flows; Global interest rate; Uncovered interest rate parity (search for similar items in EconPapers)
Date: 2019
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Working Paper: Financial Flows, Global Interest Rates, and Political Integration (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:31:y:2019:i:c:s1544612318307670

DOI: 10.1016/j.frl.2018.11.021

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