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The External Financing of Emerging Markets--Evidence from Two Waves of Financial Globalization

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  • André Faria
  • Paolo Mauro
  • Aleksandar Zaklan

Abstract

What determines the yields at which international investors are willing to lend to emerging market countries, and the amounts of such lending? We analyze the motivation underlying investors' choices in allocating their holdings across countries, through regressions for both prices (bond yields) and quantities (bond market capitalization or stocks of external liabilities) estimated during two waves of financial globalization (1870--1913 and today). The results suggest that, throughout the past one and a half centuries, a combination of human capital (including informal human capital) and institutional quality has been a key determinant of emerging market countries' ability to attract international investors. Copyright 2011, Oxford University Press.

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  • André Faria & Paolo Mauro & Aleksandar Zaklan, 2011. "The External Financing of Emerging Markets--Evidence from Two Waves of Financial Globalization," Review of Finance, European Finance Association, vol. 15(1), pages 207-243.
    • Handle: RePEc:oup:revfin:v:15:y:2011:i:1:p:207-243
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    File URL: http://hdl.handle.net/10.1093/rof/rfq016
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    Cited by:

    1. Eichler, Stefan, 2014. "The political determinants of sovereign bond yield spreads," Journal of International Money and Finance, Elsevier, vol. 46(C), pages 82-103.
    2. Igan, Deniz & Lauwers, Alexandre & Puy, Damien, 2022. "Capital Flows and Institutions," CEPR Discussion Papers 17527, C.E.P.R. Discussion Papers.
    3. Eichler, Stefan & Hofmann, Michael, 2013. "Sovereign default risk and decentralization: Evidence for emerging markets," European Journal of Political Economy, Elsevier, vol. 32(C), pages 113-134.
    4. Stefan Eichler, 2017. "How Do Political Factors Shape the Bank Risk–Sovereign Risk Nexus in Emerging Markets?," Review of Development Economics, Wiley Blackwell, vol. 21(3), pages 451-474, August.
    5. Elgin, Ceyhun & Uras, Burak R., 2013. "Public debt, sovereign default risk and shadow economy," Journal of Financial Stability, Elsevier, vol. 9(4), pages 628-640.
    6. Fatma Tasdemir, 2023. "Financial Globalization and Growth: The Impacts of Financial Development and Governance," World Journal of Applied Economics, WERI-World Economic Research Institute, vol. 9(1), pages 99-111, June.
    7. Eichler, Stefan, 2015. "How Do Political Factors Shape the Bank Risk-Sovereign Risk Nexus in Emerging Markets?," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112877, Verein für Socialpolitik / German Economic Association.

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