1st Edition

Capital Flows, Financial Markets and Banking Crises

By Chia-Ying Chang Copyright 2017
    208 Pages 4 B/W Illustrations
    by Routledge

    218 Pages 4 B/W Illustrations
    by Routledge

    The increasing capital flows in the emerging markets and developed countries have raised various concerns worldwide. One main concern is the impact of the sharp decline of capital flows – so-called sudden stops – on financial markets and the stability of banking systems and the economy. The sudden stops and banking crises have been identified as the two main features of most financial crises, including the recent Asian Financial Crisis and Global Financial Crisis. However, how capital flows and banking crises are connected still remains unanswered.

    Most current studies on capital flows are empirical work, which faces various challenges. The challenges include how data has been collected and measured in each country and how sensitive the results are to the data and the adopted methodologies. Moreover, the links between capital flows and banking systems have been neglected. This book helps provide some insight into the challenges faced by empirical studies and the lessons of the recent crises. The book develops theoretical analysis to deepen our understanding on how capital flows, banking systems and financial markets are linked with each other and provides constructive policy implications by overcoming the empirical challenges.

    1. Introduction

    2. Long-term foreign direct investment and economic growth

    3. Short-term portfolio flows and economic growth

    4. Capital flows, sudden stops and banking crises

    5. Banking governance, bank runs and the effectiveness of liquidity provision

    6. Capital controls and banking crises

    7. Theoretical and empirical analysis: practical lessons and policy implications

    8. Conclusion


    Chia-Ying Chang is a research scholar in the Faculty of Economics at Nagoya City University and an associated member of Macroeconomics Research Unit at the University of Melbourne. She received her PhD in economics from Vanderbilt University, USA. Her research interests include money and banking theory, macroeconomic theory, economic growth and development, industrial organisation and labour economic theory in macroeconomic perspective.