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Malaysian Capital Controls: Macroeconomics and Institutions

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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;

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References

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Citations

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Cited by:
  1. 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.
  2. Eswar S. Prasad & Raghuram Rajan, 2008. "A Pragmatic Approach to Capital Account Liberalization," NBER Working Papers 14051, National Bureau of Economic Research, Inc.
  3. Andrei Shleifer, 2009. "The Age of Milton Friedman," Journal of Economic Literature, American Economic Association, vol. 47(1), pages 123-35, March.
  4. Turkhan Ali Abdul Manap & Gairuzazmi M Ghani, 2012. "Malaysia's Time Varying Capital Mobility," Economics Bulletin, AccessEcon, vol. 32(2), pages 1361-1368.
  5. C. Randall Henning & Mohsin S. Khan, 2011. "Asia and Global Financial Governance," Working Paper Series WP11-16, Peterson Institute for International Economics.
  6. 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.
  7. 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.
  8. Chang, Chia-Ying, 2013. "Capital controls, capital flows, and banking crises," Working Paper Series 2979, Victoria University of Wellington, School of Economics and Finance.
  9. 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.
  10. 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.

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