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Malaysian Capital Controls

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Author Info

  • Natalia T. Tamirisa
  • Simon Johnson
  • Kalpana Kochhar
  • Todd Mitton

Abstract

We analyze the capital controls imposed in Malaysia in September 1998. In macroeconomic terms, these controls neither yielded major benefits nor were costly. At the same time, the stock market interpreted the capital controls (and associated events) as favoring firms with stronger political connections, and some connected firms reportedly received advantages immediately following the crisis. Analysis of financial accounts indicates that connected firms outperformed unconnected firms before the 1997-98 crisis but not afterward. After the crisis, connected firms were either not supported as much as the market had expected or the benefits they received were not manifest in their published accounts.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 06/51.

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Length: 51
Date of creation: 01 Feb 2006
Date of revision:
Handle: RePEc:imf:imfwpa:06/51

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Keywords: Capital controls; Stock markets; stock price; stock market; stock returns; capital market; foreign capital; bonds; domestic borrowing; capital flows; financial economics; international capital; bond; stock price performance; stock prices; denominated bonds; hedging; stock market transactions; international capital flows; domestic bond market; financial stability; capital movements; financial institutions; stock exchange; swap transactions; foreign equity; financial markets; short-term capital; domestic credit; international capital markets; access to international capital; debt securities; international financial statistics; capital market liberalization; stockbrokers; capital markets; financial sector; currency crisis; international reserves; financial futures; domestic bond; domestic capital; hedge; bond market; equity capital; capital mobility; free capital flows; access to international capital markets; capital goods; bond placements; capital formation; debt service; debt service payments; government securities; stock index; credit market; financial futures exchange; futures exchange; equity participation; sale of securities; capital investments; financial statements; portfolio investment; capital control; capital structure; bond issue; listed securities; currency crises; stabilization programs; international country risk guide; capital ownership; financial instruments; stock listings; interest rate swaps; speculative attacks;

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References

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Citations

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Cited by:
  1. Wei, Shang-Jin & Zhang, Zhiwei, 2007. "Collateral damage: Exchange controls and international trade," Journal of International Money and Finance, Elsevier, vol. 26(5), pages 841-863, September.
  2. Prasad, Eswar & Rajan, Raghuram G., 2008. "A Pragmatic Approach to Capital Account Liberalization," IZA Discussion Papers 3475, Institute for the Study of Labor (IZA).
  3. Ali K. Ozdagli & Yifan Yu, 2012. "Monetary shocks and stock returns: identification through the impossible trinity," Working Papers 12-18, Federal Reserve Bank of Boston.
  4. Andrei Shleifer, 2009. "The Age of Milton Friedman," Journal of Economic Literature, American Economic Association, vol. 47(1), pages 123-35, March.
  5. Turkhan Ali Abdul Manap & Gairuzazmi M Ghani, 2012. "Malaysia's Time Varying Capital Mobility," Economics Bulletin, AccessEcon, vol. 32(2), pages 1361-1368.
  6. Chang, Chia-Ying, 2013. "Capital controls, capital flows, and banking crises," Working Paper Series 2979, Victoria University of Wellington, School of Economics and Finance.
  7. Thierry Tressel & Thierry Verdier, 2011. "Financial Globalization and the Governance of Domestic Financial Intermediaries," Journal of the European Economic Association, European Economic Association, vol. 9(1), pages 130-175, 02.
  8. Hartwell, Christopher A., 2011. "All That’s Old is New Again: Capital Controls and the Macroeconomic Determinants of Entrepreneurship in Emerging Markets," MPRA Paper 40257, University Library of Munich, Germany.
  9. Zhiwei Zhang & Shang-Jin Wei, 2007. "Collateral Damage," IMF Working Papers 07/8, International Monetary Fund.
  10. C. Randall Henning & Mohsin S. Khan, 2011. "Asia and Global Financial Governance," Working Paper Series WP11-16, Peterson Institute for International Economics.
  11. Ebrahim, M. Shahid & Girma, Sourafel & Shah, M. Eskandar & Williams, Jonathan, 2014. "Dynamic capital structure and political patronage: The case of Malaysia," International Review of Financial Analysis, Elsevier, vol. 31(C), pages 117-128.

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