Surging Capital Flows to Emerging Asia: Facts, Impacts, and Responses

Sylwia Nowak, Sanjaya Panth, Ravi Balakrishnan and Yiqun Wu

No 2012/130, IMF Working Papers from International Monetary Fund

Abstract: Net capital flows to emerging Asia rebounded at a record pace following the global financial crisis, raising concerns about overheating and financial stability. This paper documents the size and composition of the most recent surge to Asian emerging markets from a historical perspective and compares developments in the broader economy, asset prices, and corporate variables across the different episodes of strong inflows. We find little evidence of a significant build-up of imbalances and resource misallocation during the most recent surge. We also review country experiences in managing the risks associated with inflows and argue that Asian countries have used regulatory measures during past surges, although there is not strong evidence of their efficacy without supporting monetary and fiscal policies.

Keywords: WP; ED142; financial crisis; Indonesia; Thailand; net capital; Asia; capital inflows; macroprudential policy; interest rate; net capital flow; portfolio equity; equity ratio; IMF staff calculation; portfolio debt; central bank; portfolio flow; Capital flows; Global financial crisis of 2008-2009; Balance of payments statistics; Private capital flows; Asia and Pacific; Global (search for similar items in EconPapers)
Pages: 28
Date: 2012-05-01
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Citations: View citations in EconPapers (16)

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Journal Article: SURGING CAPITAL FLOWS TO EMERGING ASIA: FACTS, IMPACTS AND RESPONSES (2013)
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