Are global imbalances due to financial underdevelopment in emerging economies?

Diego Valderrama

FRBSF Economic Letter, 2008, issue apr11

Abstract: This Economic Letter presents recent research on a new explanation for both the export of savings and the import of equity by emerging countries: their level of underdevelopment of the financial sector compared to that of more advanced countries. Specifically, financial underdevelopment in emerging markets can lead to both over saving by domestic agents and undervaluation of domestic firms, which encourages international investors to purchase equity there.

Keywords: International finance; Capital movements; Balance of payments (search for similar items in EconPapers)
Date: 2008
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https://fraser.stlouisfed.org/title/economic-lette ... ing-economies-633395

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