Are Foreign Institutional Investors Good for Emerging Markets?
AbstractPortfolio flows channelled via institutional investors were the most dynamic capital flows to emerging markets in the 1990s. We use an asymmetric information framework to derive five propositions about the effects of the activities of foreign institutional investors on emerging markets. We confront these propositions with existing empirical evidence on the financial sector of emerging markets and conclude that institutional investors do not automatically generate benefits for emerging markets. Therefore, capital account and financial market liberalisation needs to be accompanied by careful regulation. Copyright 2004 Blackwell Publishing Ltd.
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal The World Economy.
Volume (Year): 27 (2004)
Issue (Month): 8 (08)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0378-5920
Other versions of this item:
- Frenkel, Michael & Menkhoff, Lukas, 2003. "Are Foreign Institutional Investors Good for Emerging Markets?," Diskussionspapiere der Wirtschaftswissenschaftlichen FakultÃ¤t der Leibniz UniversitÃ¤t Hannover dp-283, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
- F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
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