IDEAS home Printed from https://ideas.repec.org/p/imf/imfwpa/2017-135.html

Capital Controls and the Cost of Debt

Author

Listed:
  • Eugenia Andreasen
  • Mr. Martin Schindler
  • Mr. Patricio A Valenzuela

Abstract

Using a panel data set for international corporate bonds and capital account restrictions in advanced and emerging economies, we show that restrictions on capital inflows produce a substantial and economically meaningful increase in corporate bond spreads. A number of heterogeneities suggest that the effect of capital controls on inflows is particularly strong for more financially constrained firms, establishing a novel channel through which capital controls affect economic outcomes. By contrast, we do not find a robust significant effect of restrictions on outflows.

Suggested Citation

  • Eugenia Andreasen & Mr. Martin Schindler & Mr. Patricio A Valenzuela, 2017. "Capital Controls and the Cost of Debt," IMF Working Papers 2017/135, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2017/135
    as

    Download full text from publisher

    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=44977
    Download Restriction: no
    ---><---

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Andreasen, Eugenia & Bauducco, Sofía & Dardati, Evangelina, 2024. "Capital controls and firm performance," Journal of International Economics, Elsevier, vol. 150(C).
    2. Bacchetta, Philippe & Cordonier, Rachel & Merrouche, Ouarda, 2023. "The rise in foreign currency bonds: The role of US monetary policy and capital controls," Journal of International Economics, Elsevier, vol. 140(C).
    3. Eberhardt, Markus, 2018. "(At Least) Four Theories for Sovereign Default," CEPR Discussion Papers 13084, C.E.P.R. Discussion Papers.
    4. Andreasen, Eugenia & Valenzuela, Patricio, 2016. "Financial openness, domestic financial development and credit ratings," Finance Research Letters, Elsevier, vol. 16(C), pages 11-18.
    5. Carlos Chavez, 2024. "Estimating the Effects of Financial Liberalisation on Governability and Social Stability," Foreign Trade Review, , vol. 59(4), pages 588-614, November.
    6. Valenzuela, Patricio & Mella, Javier & Claveria, Juan, 2024. "Economic uncertainty and credit risk: Evidence from international corporate bonds," Economics Letters, Elsevier, vol. 237(C).
    7. Donders, Pablo & Jara, Mauricio & Wagner, Rodrigo, 2018. "How sensitive is corporate debt to swings in commodity prices?," Journal of Financial Stability, Elsevier, vol. 39(C), pages 237-258.
    8. Fischer, Ronald & Huerta, Diego & Valenzuela, Patricio, 2015. "Inequality and Private Credit," Working Papers 15-12, University of Pennsylvania, Wharton School, Weiss Center.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • F30 - International Economics - - International Finance - - - General
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:imf:imfwpa:2017/135. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Akshay Modi (email available below). General contact details of provider: https://edirc.repec.org/data/imfffus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.