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Capital liberalization and various financial markets: Evidence from Taiwan

Manhwa Wu, Paoyu Huang and Yensen Ni

The Quarterly Review of Economics and Finance, 2017, vol. 66, issue C, 265-274

Abstract: Several studies have shown that capital liberalization has varying effects on emerging and developing markets. Meanwhile, other studies have suggested that capital liberalization has different effects on various industries. However, only a few studies have investigated whether capital liberalization has varying effects on different financial markets, including stock, currency, real estate, and bond markets. In this study, we investigate whether various financial markets in a small-scale economy, such as Taiwan, have been affected by capital liberalization in 2003, which is rarely explored comprehensively in the existing literature. Results showed that capital inflows from foreign investment institutions positively affected such markets. Consequently, the share market in Taiwan boomed, domestic currency appreciated, the real estate market soared, and bond prices increased.

Keywords: Capital liberalization; Financial markets; Capital flows (search for similar items in EconPapers)
JEL-codes: E22 G10 G38 (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1016/j.qref.2017.03.001

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