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Corporate Governance and Private Capital Flows to Latin America

  • Alberto Chong

    ()

  • Alejandro Izquierdo

    ()

  • Alejandro Micco
  • Ugo Panizza

According to recent research, external factors and political governance considerations are key determinants of capital flows in Latin America. We postulate that corporate governance is a crucial determinant as well. We show that while the region is characterized by relatively low levels of corporate governance it shows highly volatile capital flows. The high level of economic volatility that characterizes the region is partly due to the behavior of capital flows which, in turn, are influenced by external factors. The paper shows that by implementing better corporate governance the region could reduce the sensitivity of capital flows to external shocks and hence reduce the volatility of its economy.

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Paper provided by Inter-American Development Bank, Research Department in its series Research Department Publications with number 4323.

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Date of creation: Feb 2003
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Handle: RePEc:idb:wpaper:4323
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  1. Simon Johnson & Peter Boone & Alasdair Breach & Eric Friedman, 1999. "Corporate Governance in the Asian Financial Crisis," William Davidson Institute Working Papers Series 297, William Davidson Institute at the University of Michigan.
  2. Shang-Jin Wei, 1997. "How Taxing is Corruption on International Investors?," William Davidson Institute Working Papers Series 63, William Davidson Institute at the University of Michigan.
  3. Reinhart, Carmen & Calvo, Guillermo & Leiderman, Leonardo, 1993. "“Capital Inflows and Real Exchange Rate Appreciation in Latin America: The Role of External Factors," MPRA Paper 7125, University Library of Munich, Germany.
  4. Andrei Shleifer & Robert W. Vishny, 1996. "A Survey of Corporate Governance," NBER Working Papers 5554, National Bureau of Economic Research, Inc.
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  8. Reinhart, Carmen & Calvo, Guillermo, 2000. "When Capital Inflows Come to a Sudden Stop: Consequences and Policy Options," MPRA Paper 6982, University Library of Munich, Germany.
  9. Shang-Jin Wei & Yi Wu, 2002. "Negative Alchemy? Corruption, Composition of Capital Flows, and Currency Crises," NBER Chapters, in: Preventing Currency Crises in Emerging Markets, pages 461-506 National Bureau of Economic Research, Inc.
  10. Mark Taylor & Ashoka Mody, 2004. "International Capital Crunches: The Time-Varying Role Of Informational Asymmetries," Royal Economic Society Annual Conference 2004 113, Royal Economic Society.
  11. Tirole, Jean, 1999. "Corporate Governance," CEPR Discussion Papers 2086, C.E.P.R. Discussion Papers.
  12. Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 1998. "Corporate Ownership Around the World," Harvard Institute of Economic Research Working Papers 1840, Harvard - Institute of Economic Research.
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  14. Ugo Panizza, 2001. "Electoral Rules, Political Systems, and Institutional Quality," Economics and Politics, Wiley Blackwell, vol. 13(3), pages 311-342, November.
  15. Charles P. Oman, 2001. "Corporate Governance and National Development," OECD Development Centre Working Papers 180, OECD Publishing.
  16. Klapper, Leora F. & Love, Inessa, 2002. "Corporate governance, investor protection, and performance in emerging markets," Policy Research Working Paper Series 2818, The World Bank.
  17. Chuhan, Punam & Claessens,Constantijn A. & Mamingi, Nlandu, 1993. "Equity and bond flows to Asia and Latin America : the role of global and country factors," Policy Research Working Paper Series 1160, The World Bank.
  18. Adolfo Barajas & Roberto Steiner, 2002. "Credit Stagnation in Latin America," IMF Working Papers 02/53, International Monetary Fund.
  19. Alejandro Izquierdo, 2002. "Sudden Stops, the Real Exchange Rate and Fiscal Sustainability in Argentina," The World Economy, Wiley Blackwell, vol. 25(7), pages 903-923, 07.
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  21. Wheeler, David & Mody, Ashoka, 1992. "International investment location decisions : The case of U.S. firms," Journal of International Economics, Elsevier, vol. 33(1-2), pages 57-76, August.
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