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Financial reforms and capital flows to emerging Europe

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  • Martin Schmitz

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Abstract

Analysis of 21 emerging European economies reveals a substantial role for domestic financial reforms in attracting net capital flows. Controlling for standard determinants of capital flows, we find in particular banking sector reforms to be consistent with larger current account deficits and net financial inflows, whereas opposite or no effects are found for security market reforms as well as for indicators of financial depth. Additional net inflows are reaped by the EU accession countries. Banking reforms are found to have a significant impact on FDI and “other” investment net inflows; they have a significant effect on gross financial inflows, but not on outflows.

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File URL: http://hdl.handle.net/10.1007/s10663-010-9150-3
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Bibliographic Info

Article provided by Springer in its journal Empirica.

Volume (Year): 38 (2011)
Issue (Month): 4 (November)
Pages: 579-605

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Handle: RePEc:kap:empiri:v:38:y:2011:i:4:p:579-605

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Web page: http://www.springerlink.com/link.asp?id=100261

Related research

Keywords: Capital flows; Financial reforms; Financial development; Foreign direct investment;

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Cited by:
  1. Philip Lane, 2013. "Financial Globalisation and the Crisis," Open Economies Review, Springer, vol. 24(3), pages 555-580, July.
  2. repec:iis:dispap:iiisdp438 is not listed on IDEAS
  3. Lane, Philip R. & McQuade, Peter, 2013. "Domestic credit growth and international capital flows," Working Paper Series 1566, European Central Bank.

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