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Portfolio Flows Into India

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Author Info

  • Poonam Gupta
  • James P. F. Gordon

Abstract

This paper analyzes the factors affecting portfolio equity flows into India using monthly data. Flows to India are small compared to other emerging markets, but seem to be relatively less volatile. They also seem to be quite resilient. The paper shows that portfolio flows are determined by both external and domestic factors. Among external factors, LIBOR and emerging market stock returns are important, while the primary domestic determinants are the lagged stock return and changes in credit ratings. In quantitative terms, both external and domestic factors are found to be about equally important.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 03/20.

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Length: 37
Date of creation: 01 Jan 2003
Date of revision:
Handle: RePEc:imf:imfwpa:03/20

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Related research

Keywords: Capital flows; Capital inflows; Bonds; stock market; portfolio investment; stock returns; equity investment; stock market capitalization; emerging market stocks; capital account liberalization; stock exchange; equity inflows; stock market yields; private capital flows; credit rating; stock markets; equity markets; international capital markets; currency crises; equity returns; emerging market stock; stock market yield; capital gains; equity market; unlisted securities; equity investments; financial markets; foreign portfolio investment; domestic securities; capital asset pricing model; stock exchanges; global stock market; currency crisis; equity securities; capital movements; debt securities; capital markets; bond; corporate bonds; international capital; capital asset pricing; capital asset; private capital; foreign stocks; market assets; foreign securities; partial derivatives; liberalization of capital; stock prices; international reserves; capital controls; international financial statistics; current account balance; financial economics; emerging stock markets; securities market; capital gains tax; government securities;

References

References listed on IDEAS
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  1. Mody, Ashoka & Murshid, Antu Panini, 2005. "Growing up with capital flows," Journal of International Economics, Elsevier, vol. 65(1), pages 249-266, January.
  2. Nada Mora & Ratna Sahay & Jeromin Zettelmeyer & Pietro Garibaldi, 2002. "What Moves Capital to Transition Economies?," IMF Working Papers 02/64, International Monetary Fund.
  3. Guillermo A. Calvo & Leonardo Leiderman & Carmen M. Reinhart, 1993. "Capital Inflows and Real Exchange Rate Appreciation in Latin America: The Role of External Factors," IMF Staff Papers, Palgrave Macmillan, vol. 40(1), pages 108-151, March.
  4. Elaine Karen Buckberg, 1996. "Institutional Investors and Asset Pricing in Emerging Markets," IMF Working Papers 96/2, International Monetary Fund.
  5. Richard Portes & Hélène Rey, 2001. "The Determinants of Cross-Border Equity Flows," DELTA Working Papers 2001-08, DELTA (Ecole normale supérieure).
  6. Brennan, Michael J & Cao, H Henry, 1997. " International Portfolio Investment Flows," Journal of Finance, American Finance Association, vol. 52(5), pages 1851-80, December.
  7. Kenneth A. Froot & Paul G.J. O'Connell & Mark S. Seasholes, 1998. "The Portfolio Flows of International Investors, I," NBER Working Papers 6687, National Bureau of Economic Research, Inc.
  8. Chuhan, Punam & Claessens, Stijn & Mamingi, Nlandu, 1998. "Equity and bond flows to Latin America and Asia: the role of global and country factors," Journal of Development Economics, Elsevier, vol. 55(2), pages 439-463, April.
  9. John Clark & Elizabeth Berko, 1997. "Foreign investment fluctuations and emerging market stock returns: the case of Mexico," Staff Reports 24, Federal Reserve Bank of New York.
  10. John M. Griffin & Federico Nardari & Rene M. Stulz, 2002. "Daily Cross-Border Equity Flows: Pushed or Pulled?," NBER Working Papers 9000, National Bureau of Economic Research, Inc.
  11. French, Kenneth R & Poterba, James M, 1991. "Investor Diversification and International Equity Markets," American Economic Review, American Economic Association, vol. 81(2), pages 222-26, May.
  12. Reinhart, Carmen & Calvo, Guillermo, 2000. "When Capital Inflows Come to a Sudden Stop: Consequences and Policy Options," MPRA Paper 6982, University Library of Munich, Germany.
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Citations

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Cited by:
  1. Poonam Gupta & James P. F. Gordon, 2004. "Nonresident Deposits in India," IMF Working Papers 04/48, International Monetary Fund.
  2. Ministry of Finance, 2006. "Report of the Expert Group on Encouraging FII Flows and Checking the Vulnerability of Capital Markets to Speculative Flows," Working Papers id:351, eSocialSciences.
  3. Ladekarl, Jeppe & Zervos, Sara, 2004. "Housekeeping and plumbing - the investability of emerging markets," Policy Research Working Paper Series 3229, The World Bank.
  4. Poonam Gupta, 2005. "Macroeconomic Determinants of Remittances," IMF Working Papers 05/224, International Monetary Fund.
  5. Ajay Shah & Ila Patnaik, 2005. "India's Experience with Capital Flows: The Elusive Quest for a Sustainable Current Account Deficit," NBER Working Papers 11387, National Bureau of Economic Research, Inc.
  6. Ladekarl, Jeppe & Zervos, Sara, 2004. "Housekeeping and plumbing: the investability of emerging markets," Emerging Markets Review, Elsevier, vol. 5(3), pages 267-294, September.
  7. Faisal Ahmed & Rabah Arezki & Norbert Funke, 2007. "The composition of capital flows to South Africa," Journal of International Development, John Wiley & Sons, Ltd., vol. 19(2), pages 275-294.
  8. Garg, Reetika & Dua, Pami, 2014. "Foreign Portfolio Investment Flows to India: Determinants and Analysis," World Development, Elsevier, vol. 59(C), pages 16-28.
  9. Norbert Funke & Faisal Ahmed & Rabah Arezki, 2005. "The Composition of Capital Flows," IMF Working Papers 05/40, International Monetary Fund.

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