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Does financial liberalization decrease capital flight? A panel causality analysis

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  • Yalta, A. Yasemin
  • Yalta, A. Talha

Abstract

We employ a panel causality approach in order to examine whether financial liberalization affects the magnitude of capital flight, which measures unrecorded accumulation of foreign assets by the private sector. Our data from 21 emerging market economies for the period between 1980 and 2004 show no significant evidence of a causal relationship. Lagged values of capital flight, however, seem to increase its current level, indicating its self-reinforcing characteristic. Our results suggest that financial liberalization policies per se may not be helpful in reducing capital flight.

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Bibliographic Info

Article provided by Elsevier in its journal International Review of Economics & Finance.

Volume (Year): 22 (2012)
Issue (Month): 1 ()
Pages: 92-100

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Handle: RePEc:eee:reveco:v:22:y:2012:i:1:p:92-100

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Web page: http://www.elsevier.com/locate/inca/620165

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Keywords: Capital flight; Financial liberalization; Emerging markets; Panel causality;

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Cited by:
  1. A. Yasemin Yalta & A. Talha Yalta, 2011. "Does Financial Liberalization Decrease Capital Flight? A Panel Causality Analysis," Working Papers, TOBB University of Economics and Technology, Department of Economics 1102, TOBB University of Economics and Technology, Department of Economics.

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