Does financial liberalization decrease capital flight? A panel causality analysis

A. Yasemin Yalta and A. Talha Yalta
Authors registered in the RePEc Author Service: Ayse Yasemin Yalta

International Review of Economics & Finance, 2012, vol. 22, issue 1, 92-100

Abstract: We employ a panel causality approach in order to examine whether financial liberalization affects the magnitude of capital flight, which measures unrecorded accumulation of foreign assets by the private sector. Our data from 21 emerging market economies for the period between 1980 and 2004 show no significant evidence of a causal relationship. Lagged values of capital flight, however, seem to increase its current level, indicating its self-reinforcing characteristic. Our results suggest that financial liberalization policies per se may not be helpful in reducing capital flight.

Keywords: Capital flight; Financial liberalization; Emerging markets; Panel causality (search for similar items in EconPapers)
JEL-codes: C23 F32 F39 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (27)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:22:y:2012:i:1:p:92-100

DOI: 10.1016/j.iref.2011.09.003

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