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Sailing through this Storm? Capital Flows in Asia during the Crisis

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  • Cedric TILLE

    (Graduate Institute of International and Development Studies and Centre for Economic Policy Research and Hong Kong Institute for Monetary Research)

Abstract

The current crisis has led to an unprecedented collapse in international capital flows, with substantial heterogeneity across regions. Asian economies were relatively unaffected, despite having been the center of the storm in the crisis of the late 1990s. The contraction in capital flows for Asian countries was limited to the most acute phase of the crisis following the collapse of Lehman Brothers, after which capital flows rebounded. We find that the stronger performance of Asia primarily reflects its more limited reliance on international banking compared to Europe and the United States. We find little evidence that the drivers of capital flows had a differentiated impact in Asia. Finally, we show that while higher initial levels of foreign reserves did not insulate countries from a turnaround in private capital flows, a larger use of reserves at the height of the crisis limited the contraction in gross private outflows.

Suggested Citation

  • Cedric TILLE, 2011. "Sailing through this Storm? Capital Flows in Asia during the Crisis," Working Papers 202011, Hong Kong Institute for Monetary Research.
  • Handle: RePEc:hkm:wpaper:202011
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    Cited by:

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    2. Silvio Contessi & Pierangelo De Pace, 2012. "(Non-)Resiliency Of Foreign Direct Investment In The United States During The 2007–2009 Financial Crisis," Pacific Economic Review, Wiley Blackwell, vol. 17(3), pages 368-390, August.
    3. Yamamoto, Shugo, 2014. "Transmission of US financial and trade shocks to Asian economies: Implications for spillover of the 2007–2009 US financial crisis," The North American Journal of Economics and Finance, Elsevier, vol. 27(C), pages 88-103.
    4. Kwang-Myoung Hwang & Donghyun Park & Kwanho Shin, 2013. "Capital Market Openness and Output Volatility," Pacific Economic Review, Wiley Blackwell, vol. 18(3), pages 403-430, August.
    5. Tillmann, Peter, 2013. "Capital inflows and asset prices: Evidence from emerging Asia," Journal of Banking & Finance, Elsevier, vol. 37(3), pages 717-729.
    6. Anne Epaulard & Aude Pommeret, 2016. "Financial Integration, Growth and Volatility," Pacific Economic Review, Wiley Blackwell, vol. 21(3), pages 330-357, August.
    7. Joshua Aizenman & Yothin Jinjarak & Donghyun Park, 2016. "Fundamentals and Sovereign Risk of Emerging Markets," Pacific Economic Review, Wiley Blackwell, vol. 21(2), pages 151-177, May.
    8. Jason Rastovski, 2016. "The Changing Relationship between Banking Crises and Capital Inflows," Review of Development Economics, Wiley Blackwell, vol. 20(2), pages 514-530, May.
    9. Narendar Rao & K. Reddy, 2015. "The impact of the global financial crisis on cross-border mergers and acquisitions: a continental and industry analysis," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 5(2), pages 309-341, December.
    10. Eng, Yoke-Kee & Wong, Chin-Yoong, 2016. "Asymmetric growth effect of capital flows: Evidence and quantitative theory," Economic Systems, Elsevier, vol. 40(1), pages 64-81.

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    Keywords

    International Capital Flows; Banking Integration; Crisis;
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