Composition Matters : Capital Inflows and Liquidity Crunch during a Global Economic Crisis.
Title:
Composition Matters : Capital Inflows and Liquidity Crunch during a Global Economic Crisis.
Author:
Tong, Hui.
ISBN:
9781451917390
Personal Author:
Physical Description:
1 online resource (39 pages)
Series:
IMF Working Papers
Contents:
Contents -- I. Introduction -- II. Specification and Key Variables -- A. Basic Specification -- B. Key Data -- III. Empirical Analysis -- A. The Extent of Financial Constraint -- B. The Role of Pre-crisis Exposure to International Finance -- Conclusion -- Tables -- 1. Average Change of Stock Price(log) -- 2a. Summary Statistics -- 2b. Correlation of Variables -- 3. The Average Effect of Liquidity Crunch Across Countries -- 4. Pre-Crisis Exposure to Capital Inflows -- 5. Role of Pre-Crisis Exposure to Capital Inflows in Emerging Economies (Volume Effect) -- 6. Role of Pre-Crisis Exposure to Capital Inflows in Emerging Economies (Composition Effect) -- 7. Role of Pre-Crisis Exposure to Capital Inflows (Robusiness Checks) -- 8. Role of Pre-Crisis Exposure to Capital Inflows (More Robustness Checks) -- 9. Role of Pre-Crisis Exposure to Capital Inflows in Emerging Economies (Non-financial firms) -- 10. Placebo Test -- 11. Stock Returns Around Lehman Brothers Bankruptcy -- Figures -- 1. Capital Flow to Emerging Economies -- 2. The Extent of Capital Reversal versus the Initial Share of FDI in Capital Flows -- 3. Change in Log Banking Stock Prices vs Pre-Crisis International Bank Loans -- Appendix -- 1. De Jure Financial Openness for Year 2006 -- References.
Abstract:
We study whether capital flows affect the degree of credit crunch faced by a country's manufacturing firms during the 2007-09 crisis. Examining 3823 firms in 24 emerging countries, we find that the decline in stock prices was more severe for firms that are intrinsically more dependent on external finance for working capital. The volume of capital flows has no significant effect on the severity of the credit crunch. However, the composition of capital flows matters: pre-crisis exposure to non-FDI capital inflows worsens the credit crunch, while exposure to FDI alleviates the liquidity constraint. Similar results also hold surrounding the Lehman Brothers bankruptcy.
Local Note:
Electronic reproduction. Ann Arbor, Michigan : ProQuest Ebook Central, 2017. Available via World Wide Web. Access may be limited to ProQuest Ebook Central affiliated libraries.
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