Economics at your fingertips  

Foreign Investors Under Stress: Evidence from India

Ila Patnaik (), Ajay Shah and Nirvikar Singh ()

No 2013/122, IMF Working Papers from International Monetary Fund

Abstract: Emerging market policy makers have been concerned about the financial stability implications of financial globalization. These concerns are focused on behavior under stressed conditions. Do tail events in the home country trigger off extreme responses by foreign investors – are foreign investors `fair weather friends'? In this, is there asymmetry between the response of foreign investors to very good versus very bad days? Do foreign investors have a major impact on domestic markets through large inflows or outflows – are they ‘big fish in a small pond’? Do extreme events in world markets induce extreme behavior by foreign investors, thus making them vectors of crisis transmission? We propose a modified event study methodology focused on tail events, which yields evidence on these questions. The results, for India, do not suggest that financial globalization has induced instability on the equity market.

Keywords: WP; event study methodology; FII flow; flat event study response; event study analysis; foreign investor; Event study; Extreme events; Foreign investors; event study approach; event study framework; Stock markets; Emerging and frontier financial markets; Exchange rates; Foreign direct investment; Capital controls; Global (search for similar items in EconPapers)
Pages: 31
Date: 2013-05-22
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6) Track citations by RSS feed

Downloads: (external link) (application/pdf)

Related works:
Journal Article: Foreign Investors under Stress: Evidence From India (2013) Downloads
Working Paper: Foreign Investors Under Stress: Evidence from India (2012) Downloads
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:

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Akshay Modi ().

Page updated 2023-12-04
Handle: RePEc:imf:imfwpa:2013/122