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Vulnerabilities in Emerging Southeastern Europe

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  • International Monetary Fund
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    Abstract

    While large inflows of capital into Southeastern Europe (SEE) have raised incomes, this has increased vulnerability to financial risks, which, if realized, can lead to costly adjustments. Traditional vulnerability indicators in SEE have reached levels that in other countries have not been sustainable, and sectoral analysis shows rising imbalances and raises questions about efficient use of the inflows. While factors related to EU integration mitigate these vulnerabilities, weaker institutions reduce these benefits in SEE compared to more advanced European emerging markets. To insure against setbacks to income convergence, SEE policymakers should take measures to reverse the buildup of vulnerabilities.

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    Bibliographic Info

    Paper provided by International Monetary Fund in its series IMF Working Papers with number 07/236.

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    Length: 44
    Date of creation: 01 Oct 2007
    Date of revision:
    Handle: RePEc:imf:imfwpa:07/236

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    Keywords: Capital inflows; Emerging markets; Economic indicators; Adjustment process; foreign currency; foreign banks; fdi; current account deficits; capital markets; subsidiaries; host countries; foreign bank; current account deficit; capital flows; foreign liabilities; host country; capital adequacy; domestic credit; foreign affiliates; capital flow; real appreciation; foreign capital; capital accounts; corporate assets; foreign exchange; credit expansion; capital formation; international capital markets; capital controls; foreign assets; foreign investors; global capital markets; equity finance; domestic equity; foreign participation; capital losses; capital market; foreign affiliate; foreign operations; international investment; international capital; world capital markets; industrial countries; short term debt; external financing; manufacturing sector; capital market development; capital flow reversals; crisis prevention; stock exchanges; stock market; current account balance; option pricing; management techniques; indexation; excess liquidity; foreign markets; securities markets; local capital markets; industrial development; loss of confidence; capital adequacy ratios; moral hazard; debt service; international settlements; net capital;

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    Cited by:
    1. Andrea M Maechler & Srobona Mitra & Delisle Worrell, 2010. "Decomposing Financial Risks and Vulnerabilities in Emerging Europe," IMF Staff Papers, Palgrave Macmillan, vol. 57(1), pages 25-60, April.
    2. Dumitru, Ionut & Dumitru, Ionela, 2009. "An Assessment of the Current Account Sustainability in Romania – An Inter-temporal Perspective," Journal for Economic Forecasting, Institute for Economic Forecasting, Institute for Economic Forecasting, vol. 6(2), pages 23-41, June.
    3. Degryse, Hans & Havrylchyk, Olena & Jurzyk, Emilia & Kozak, Sylwester, 2012. "Foreign bank entry, credit allocation and lending rates in emerging markets: Empirical evidence from Poland," Journal of Banking & Finance, Elsevier, Elsevier, vol. 36(11), pages 2949-2959.
    4. Brown, Martin & Ongena, Steven & Yesin, Pinar, 2011. "Foreign currency borrowing by small firms in the transition economies," Journal of Financial Intermediation, Elsevier, Elsevier, vol. 20(3), pages 285-302, July.
    5. DeLisle Worrell & Andrea M. Maechler & Srobona Mitra, 2007. "Decomposing Financial Risks and Vulnerabilities in Eastern Europe," IMF Working Papers 07/248, International Monetary Fund.

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