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Do Herding Behavior And Positive Feedback Effects Influence Capital Inflows? Evidence From Asia And Latin America

Author

Listed:
  • Meng-Fen Hsieh
  • Yu-Tai Yang
  • Tam Bang Vu

Abstract

A considerable amount of research has focused on herding behavior vis-Ã -vis international capital, either by focusing on theory or by applying simple statistical analyses, but most studies have ignored factors that trigger international capital inflows. In essence, any connection between theory and empirical evidence has not been validated. In this paper, we test two primary drivers of capital inflows to emerging markets, namely herding behavior and positive feedback effects. Data from Asia and Latin America are used for our empirical study. There is significant evidence of positive feedback and herding behavior in both stable and highly volatile countries.

Suggested Citation

  • Meng-Fen Hsieh & Yu-Tai Yang & Tam Bang Vu, 2008. "Do Herding Behavior And Positive Feedback Effects Influence Capital Inflows? Evidence From Asia And Latin America," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 2(2), pages 19-34.
    • Handle: RePEc:ibf:ijbfre:v:2:y:2008:i:2:p:19-34
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    Cited by:

    1. Suxiao Li & Jakob de Haan & Bert Scholtens, 2019. "Sudden stops of international fund flows: Occurrence and magnitude," Review of International Economics, Wiley Blackwell, vol. 27(1), pages 468-497, February.

    More about this item

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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