International capital crunches: the time-varying role of informational asymmetries
Mody, Ashoka and Taylor, Mark P., 1958- (2003) International capital crunches: the time-varying role of informational asymmetries. Discussion Paper. London: Centre for Economic Policy Research (Great Britain). Discussion paper (Centre for Economic Policy Research (Great Britain)) (No.375).
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We examine the determinants of capital flows to four developing countries during the 1990s using an explicitly disequilibrium econometric framework in which the supply and demand for capital are not necessarily equal, and the actual amount of the flow is determined by the ‘short side’ of the market. We are thus able to detect instances of ‘international capital crunch’ — where capital flows are curtailed because of supply-side rationing — and to relate these instances to movements in the underlying fundamentals. The analysis highlights the role of asymmetric information — as distinct from the traditional concern with default risk — in conditioning capital flows.
|Item Type:||Working or Discussion Paper (Discussion Paper)|
|Subjects:||H Social Sciences > HG Finance|
|Divisions:||Faculty of Social Sciences > Economics|
|Library of Congress Subject Headings (LCSH):||Capital movements, Equilibrium (Economics), Information asymmetry, Rationing|
|Series Name:||Discussion paper (Centre for Economic Policy Research (Great Britain))|
|Publisher:||Centre for Economic Policy Research (Great Britain)|
|Place of Publication:||London|
|Official Date:||February 2003|
|Number of Pages:||27|
|Status:||Not Peer Reviewed|
|Access rights to Published version:||Open Access|
Agénor, P.-R. (1998), ‘The Surge in Capital Flows: Analysis of ‘Pull’ and ‘Push’ Factors’, International Journal of Finance and Economics, 3, pp. 39-57.
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