Non-financial corporations as financial intermediaries and their macroeconomic implications: an empirical analysis for Latin America

Claudia de Camino, Caldentey Esteban Pérez and Cecilia Vera

Chapter 4 in Foreign Exchange Constraint and Developing Economies, 2023, pp 71-98 from Edward Elgar Publishing

Abstract: This chapter focuses on the role of non-financial corporations as financial intermediaries in Latin America (LAC). Non-resident corporates in the region – foreign affiliates of LAC firms – have been sending the proceeds of international bond issues, a major source of cross-border finance, to be invested in LAC through several channels. The focus is placed on intercompany loans. Although intercompany loans are classified as foreign direct investment in balance-of-payments statistics, these behave like portfolio flows, making economies more vulnerable to short-term fluctuations, thus hardening the external constraint and raising financial stability and fragility concerns. Intercompany loans are highly correlated with the business cycle in several Latin American countries, and this relationship becomes even more clear during crisis periods. Intercompany loans are key to understanding the extent to which the business cycle in Latin America is driven by internal/external factors and the transmission mechanisms linking external to internal conditions.

Keywords: Development Studies; Economics and Finance; Politics and Public Policy (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.elgaronline.com/view/edcoll/9781800880504/9781800880504.00011.xml (application/pdf)
Our link check indicates that this URL is bad, the error code is: 503 Service Temporarily Unavailable

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:elg:eechap:20432_4

Ordering information: This item can be ordered from
http://www.e-elgar.com
sales@e-elgar.co.uk

Access Statistics for this chapter

More chapters in Chapters from Edward Elgar Publishing
Bibliographic data for series maintained by Darrel McCalla (darrel@e-elgar.co.uk).