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Portfolio Flows into Indonesia: Push or Pull?


  • Chaikal Nuryakin

    (Department of Economics, Universitas Indonesia)

  • Edith Zheng Wen Yuan

    (Department of Economics, Universitas Indonesia)

  • I Gede Putra Arsana

    (Finance and Market, World Bank Group Indonesia)


This paper focuses on the dynamic of the portfolio flows into Indonesia. The result of Structural Vector Autoregression (SVAR) model reveals that push factors is more dominant than pull factors in explaining portfolio flows into Indonesia. Portfolio flows into Indonesia are positively correlated with regional’s stock market performance and negatively correlated to the federal funds rate. On the pull factors, domestic risk (the Credit Default Swap spread) is more dominant than domestic return (the BI rate) in explaining the flows.Thus, it is important for authorities to have more focus on domestic risk–relative to rate of return–in managing portfolio flows. In addition, the negative impact of the lagged Indonesia stock market index to the capital flowsindicates a counter cyclical investment behavior of global investors.

Suggested Citation

  • Chaikal Nuryakin & Edith Zheng Wen Yuan & I Gede Putra Arsana, 2016. "Portfolio Flows into Indonesia: Push or Pull?," Economics and Finance in Indonesia, Faculty of Economics and Business, University of Indonesia, vol. 62, pages 121-126, August.
  • Handle: RePEc:lpe:efijnl:201610

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    References listed on IDEAS

    1. Taylor, Mark P & Sarno, Lucio, 1997. "Capital Flows to Developing Countries: Long- and Short-Term Determinants," World Bank Economic Review, World Bank Group, vol. 11(3), pages 451-470, September.
    2. Cooper, Ian & Kaplanis, Evi, 1994. "Home Bias in Equity Portfolios, Inflation Hedging, and International Capital Market Equilibrium," Review of Financial Studies, Society for Financial Studies, vol. 7(1), pages 45-60.
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    More about this item


    Portfolio Flows; VAR;

    JEL classification:

    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions


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