Thailand Capital Flight through Trade with the US During Times of Political and Economic Instability

Pornchai Chunhachinda (), Maria E. de Boyrie () and Simon J. Pak ()
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Pornchai Chunhachinda: Faculty of Commerce and Accountancy, Thammasat University, 2 Prachan Road, Bangkok 10200, Thailand
Maria E. de Boyrie: New Mexico State University, PO Box 30001/Department of MSC 3FIN, Las Cruces, NM 88003-8001, USA
Simon J. Pak: Penn State University, Great Valley School of Graduate Professional Studies, 30 East Swedesford Road, Malvern, PA 19355, USA

Review of Pacific Basin Financial Markets and Policies (RPBFMP), 2008, vol. 11, issue 03, 363-387

Abstract: This paper investigates capital flight from Thailand to the US through trade misinvoicing during the period from 1990 to 2005. The evidence indicates that capital flight from Thailand to the US, valued over US$16,189 million, had been done through under-invoicing exports to the US rather than over-invoicing imports from the US. The major incentive for the movement of capital is investment, followed by political events in Thailand, and the most significant determinants of capital flight are the US T-bill rate, the deposit rate in Thailand, and the degree of overvaluation of the Thai Baht. Interestingly, the 1997 Asian economic crisis did not play a significant role in the capital movement through trade.

Keywords: Capital flight; trade misinvoicing; political; economic instability (search for similar items in EconPapers)
JEL-codes: G1 G2 G3 (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (1)

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DOI: 10.1142/S0219091508001404

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