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Cross-Border Portfolio Investment Inflows to Emerging Countries: Enhanced Dominance of Local Factors amid the COVID-19 Pandemic

Author

Listed:
  • Kei-Ichiro Inaba
  • Daisuke Maruyama

    (Hitotsubashi University Business School)

Abstract

Analysing the determinants of cross-border portfolio investment inflows to 17 emerging countries in 2012–2020, this study supports a global financial cycle hypothesis stressing the dominant role played by global factors in those inflows. In the amid- COVID-19 period of 2020, such dominance decreased mainly through global real business factors. The relative dominance of local factors increased then. Increases of short-term interest rates and mitigations of sovereign risks in the countries were more greatly associated with discouraging global investors from selling local securities in the pandemic period than before.

Suggested Citation

  • Kei-Ichiro Inaba & Daisuke Maruyama, 2022. "Cross-Border Portfolio Investment Inflows to Emerging Countries: Enhanced Dominance of Local Factors amid the COVID-19 Pandemic," Review of Development Finance Journal, Chartered Institute of Development Finance, vol. 12(2), pages 18-26.
    • Handle: RePEc:afj:journ3:v:12:y:2022:i:2:p:18-26
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    File URL: https://journals.co.za/doi/abs/10.10520/ejc-rdfin_v12_n2_a3
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    More about this item

    Keywords

    Global financial cycle; cross-border portfolio investment; emerging markets finance; monetary policy; COVID-19 pandemic;
    All these keywords.

    JEL classification:

    • F3 - International Economics - - International Finance
    • G1 - Financial Economics - - General Financial Markets
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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