Equity and bond flows to Asia and Latin America: the role of global and country factors

Punam Chuhan, Stijn Claessens () and Nlandu Mamingi

No 1160, Policy Research Working Paper Series from The World Bank

Abstract: The authors investigate what has motivated the large portfolio flows to several developing countries in recent years. Using monthly data on U.S. capital flows to nine Latin American and nine Asian countries (instead of monthly reserves data), they analyze the behavior of bond and equity flows to those countries. Using panel data, they find that global factors - such as a drop in U.S. interest rates and the slowdown in U.S. industrial production - are important in explaining capital inflows. But country developments are at least as important in determining those flows, especially for Asia. They also find that equity flows are more sensitive than bond flows to global factors, but that bond flows are generally more sensitive to a country's credit rating and to the secondary market price of debt.

Keywords: Investment and Investment Climate; Public Sector Economics; Macroeconomic Management; Public Finance Decentralization and Poverty Reduction; Financial Structures; Crime and Society (search for similar items in EconPapers)
Date: 1993-07-31
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Citations: View citations in EconPapers (72)

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