Motivations for capital controls and their effectiveness

Radhika Pandey, Gurnain Pasricha (), Ila Patnaik and Ajay Shah

Working Papers from National Institute of Public Finance and Policy

Abstract: We assess the motivations for changing capital controls and their effectiveness in India, a country where there is a comprehensive capital control system covering all crossborder transactions. We focus on foreign borrowing by firms, where systemic risk concerns could potentially play a role. A novel fine-grained data set of capital control actions is constructed. We find that capital control actions are potentially motivated by exchange rate considerations, but not by systemic risk issues. A quasi-experimental design reveals that the actions appear to have no impact either on the exchange rate or on variables connected with systemic risk.

Keywords: Capital controls; Capital flows; Exchange rate; Foreign borrowing (search for similar items in EconPapers)
JEL-codes: F38 G15 G18 (search for similar items in EconPapers)
Pages: 46
Date: 2016-04
New Economics Papers: this item is included in nep-cba, nep-ifn and nep-rmg
Note: Working Paper 168, 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

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Related works:
Journal Article: Motivations for capital controls and their effectiveness (2021)
Working Paper: Motivations for Capital Controls and Their Effectiveness (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:npf:wpaper:16/168

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