Controlling Capital? Legal Restrictions and the Asset Composition of International Financial Flows

By Mahir Binici, Michael M. Hutchison, M. Schindler. Social Science Research Network, 2009

184 citations recorded by the source corpus.

How effective are capital account restrictions? We provide new answers based on a novel panel data set of capital controls, disaggregated by asset class and by inflows/outflows, covering 74 countries during 1995-2005. We find the estimated effects of capital controls to vary markedly across the types of capital controls, both by asset categories, by the direction of flows, and across countries' income levels. In particular, both debt and equity controls can substantially reduce outflows, with little effect on capital inflows, but only high-income countries appear able to effectively impose debt (outflow) controls. The results imply that capital controls can affect both the volume and the composition of capital flows.

Subfields: Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/35f9f30354cd56cea60e0ade9b2c7b0bdd18d588

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Citations in the corpus

Do Surges in International Capital Inflows Influence the Likelihood of Banking Crises?: Cross-Country Evidence on Bonanzas in Capital Inflows and Bonanza-Boom-Bust Cycles (2012, unknown): “However, controls seem to be ineffective in reducing the volume of flows and may have the effect of bending them towards equity-like instruments (see Ostry et al. (2010), IMF (2010) and Binici et al. (2010)).”
Comparative assessment of macroprudential policies (2015, methodology): “As Binici et al (2010) point out, capital account restrictions aim to directly a¤ect actual transactions, and can indirectly a¤ect valuation changes.”
Assessing Measures of Financial Openness and Integration (2011, methodology): “We compare the coding and data properties of 10 de jure and de facto measures of financial globalization: UNCTAD’s Inward FDI flows as a 13See Binici, Hutchison, and Schindler (2010) for the link between de jure regulations and de facto outcomes.”
Domestic and multilateral effects of capital controls in emerging markets (2018, unknown): “Capital flow measures may have asymmetric effects on the volume of capital inflows and outflows in the sense that restrictions on inflows may be less effective than those on outflows (Binici et al., 2010), although the opposite has also been found (Ariyoshi et al.”
Capital Control Measures: A New Dataset (2015, unknown): “5See, for example, Forbes (2007), Binici, Schindler, and Hutchison (2010), Klein (2012), Prati, Schindler, and Valenzuela (2012), Forbes and Klein (2015), and Klein and Shambaugh (2015).”