Capital Controls and the Cost of Debt

Eugenia Andreasen, Martin Schindler and Patricio Valenzuela

No 2017/135, IMF Working Papers from International Monetary Fund

Abstract: Using a panel data set for international corporate bonds and capital account restrictions in advanced and emerging economies, we show that restrictions on capital inflows produce a substantial and economically meaningful increase in corporate bond spreads. A number of heterogeneities suggest that the effect of capital controls on inflows is particularly strong for more financially constrained firms, establishing a novel channel through which capital controls affect economic outcomes. By contrast, we do not find a robust significant effect of restrictions on outflows.

Keywords: WP; capital account restriction; firm; bond; control; capital account; risk diversification; operating income; bond market market capitalization; debt capital; short-term debt; market illiquidity; Capital account; Capital controls; Corporate bonds; Bonds; Yield curve; Global (search for similar items in EconPapers)
Pages: 26
Date: 2017-06-09
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Capital Controls and the Cost of Debt (2019)
Working Paper: Capital Controls and the Cost of Debt (2015)
Working Paper: Capital Controls and the Cost of Debt (2015)
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