Liquidity Black Holes: And Why Modern Financial Regulation in Developed Countries is making Short-Term Capital Flows to Developing Countries Even More Volatile

Avinash Persaud

No DP2002-31, WIDER Working Paper Series from World Institute for Development Economic Research (UNU-WIDER)

Abstract: Modern financial regulation has been about the spread of market-sensitive risk-management systems for banks, the spill-over of this approach to other financial institutions and the retreat of regulatory ambition. There is evidence that these trends are leading to a more fragile financial system, more prone to concentration and 'liquidity black holes'. The most glaring effects of these trends are felt in the pro-cyclicality and volatility of capital flows to risky markets.

Keywords: Capital investments; Financial institutions; International finance (search for similar items in EconPapers)
Date: 2002
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Citations: View citations in EconPapers (3)

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