Revisiting capital flow drivers: Regional dynamics, constraints, and geopolitical influences

Zied Ftiti, Hachmi Ben Ameur, Wael Louhichi, Dimitris Anastasiou and Haithem Awijen

Journal of International Money and Finance, 2024, vol. 142, issue C

Abstract: Our study revisits the drivers of capital flow movement by considering push, pull, and contagion factors for two distinct economic areas: BRICS and a group of European countries. This research was prompted by intensified regional integration and geopolitical challenges, which led to a concentration of regional investments. Major geopolitical events, such as Russian sanctions and the US–China conflict, have spurred capital shifts from affected areas. Based on our regional perspective analysis, we introduce capital flow constraints as an additional driver of capital movement. Our panel data analysis reveals two key insights: Firstly, unlike Europe, which mainly generates outflows, BRICS nations primarily attract capital inflows driven by internal and global influences. Secondly, BRICS exhibits higher sensitivity to capital inflow constraints, whereas Europe is more responsive to outflow constraints. Overall, our research highlights the distinct capital flow trends in BRICS and Europe, driven by their unique economic and geopolitical contexts.

Keywords: Capital flows; Inflows; Outflows; FDI flows; Equity flows; Capita constraints (search for similar items in EconPapers)
JEL-codes: C23 F21 F32 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:142:y:2024:i:c:s0261560624000366

DOI: 10.1016/j.jimonfin.2024.103049

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