This paper analyzes the behavior of gross capital inflows across 34 emerging markets (EMs).
We first confirm that aggregate inflows to EMs co-move considerably. We then report three
findings: (i) the aggregate co-movement conceals significant heterogeneity across asset types
as only bank-related and portfolio bond and equity inflows do co-move; (ii) while global
push factors in advanced economies mostly explain the common dynamics, their relative
importance varies by type of flow; and (iii) the sensitivity to common dynamics varies
significantly across borrower countries, with market structure characteristics (especially the
composition of the foreign investor base and the level of liquidity) rather than borrower
country’s institutional fundamentals strongly affecting sensitivities. Countries relying more
on international funds and global banks are found to be more sensitive to push factors. Our
findings suggest that EMs need to closely monitor their lenders and investors to assess their
inflow exposures to global push factors.
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|Size: ||2.7 MB|
|Publisher: ||INTERNATIONAL MONETARY FUND|
|Date published: || 2015|
|ISBN: ||9781513517568 (DRM-EPUB)|
|Read Aloud: ||not allowed|