1,721,114 research outputs found
Nils Bhinda, Jonathan Leape, Matthew Martin, Stephany Griffith-Jones (dir.), Private Capital Flows to Africa : Perception and Reality
No full textNils Bhinda, Jonathan Leape, Matthew Martin, Stephany Griffith-Jones (dir.), Private Capital Flows to Africa : Perception and Reality. In: Tiers-Monde, tome 43, n°169, 2002. Les chemins de l'intégration régionale. pp. 236-239
Nils Bhinda, Jonathan Leape, Matthew Martin, Stephany Griffith-Jones (dir.), Private Capital Flows to Africa : Perception and Reality
No full textNils Bhinda, Jonathan Leape, Matthew Martin, Stephany Griffith-Jones (dir.), Private Capital Flows to Africa : Perception and Reality. In: Tiers-Monde, tome 43, n°169, 2002. Les chemins de l'intégration régionale. pp. 236-239
The Instability and Inequities of the Global Reserve System
Full text linkThis paper argues that the current global reserve system is inherently unstable due to the use of a national currency as the major international reserve currency, and the high demand for “self-insurance” by developing countries. The latter is due to the mix of highly pro-cyclical capital flows and the limited room to maneuver that developing countries have to manage counter-cyclical macroeconomic policies. Both features imply that the system is also inequitable. An important insight of the paper is that such inequities feed into the instability of current arrangements. Any meaningful reform of the system must therefore address these two interlinked features.Global reserve currency, seigniorage powers, financial volatility, pro-cyclical macroeconomic policies, self-insurance, inequities of international economic order
The Financial Crisis and Its Impact on Developing Countries
Full text linkThis working paper has been commissioned by the Poverty Group, Bureau for Development Policy at UNDP, to identify the transmission mechanisms of the financial crisis from developed to developing countries and to provide broad policy recommendations at the national, global and regional level. The paper identifies three mechanisms that play a key role in spreading the consequences of the financial crisis to the developing world: remittances, capital flows and trade. The policy responses take MDG achievement and poverty reduction as the central policy concern. The paper indicates that a fair number of countries have policy space to protect vulnerable groups in the short run as well as to undertake investments to build resilience and reach these goals in the longer term. Other countries will need additional development assistance to protect development achievements. The authors point to a number of factors that need to be taken into account in determining what mix of policies to deploy including the macroeconomic, fiscal and policy stance of countries and their dynamics. The paper also proposes far-reaching reforms to address the global financial crisis, which would help to put the global macroeconomic, fiscal and financial coordination mechanisms on a firmer footing.The Financial Crisis and Its Impact on Developing Countries
Financial Regulations in Developing Countries: Can they Effectively Limit the Impact of Capital Account Volatility?
Full text linkThis paper identifies two alternative forms of prudential regulation. The first set is formed by regulations that directly control financial aggregates, such as liquidity expansion and credit growth. An example is capital requirements as currently incorporated in internationally accepted standards; namely capital requirements with risk categories used in industrial countries. The second set, which can be identified as the “pricing-risk-right” approach, works by providing incentives to financial institutions to avoid excessive risk-taking activities. A key feature of this set of regulations is that they encourage financial institutions to internalize the costs associated with the particular risks of the environment where they operate. Regulations in this category include ex-ante risk-based provisioning rules and capital requirements that take into account the risk features particular to developing countries. This category also includes incentives for enhancing market discipline as a way to differentiate risk-taking behavior between financial institutions. The main finding of the paper is that the first set of regulations—the most commonly used in developing economies-- have had very limited usefulness in helping countries to contain the risks involved with more liberalized financial systems. The main reason for this disappointing result is that, by not taking into account the particular characteristics of financial markets in developing countries, these regulations cannot effectively control excessive risk taking by financial institutions. Moreover, the paper shows that, contrary to policy intentions, this set of prudential regulations can exacerbate rather than decrease financial sector fragility, especially in episodes of sudden reversal of capital flows. In contrast, the paper claims, the second set of prudential regulation can go a long way in helping developing countries achieving their goals. The paper advances suggestions for the sequencing of implementation of these regulations for different groups of countries.regulation, liquidity, credit growth, pricing-risk-right, financial institutions, capital flows, developing countries
Price-based capital account regulations: the Colombian experience
Full text linkThe Chilean experience with price-based capital account regulations (i.e., deposits or reserve requirements on capital inflows) has been subject to extensive discussion in the recent literature. This paper presents evidence on the effectiveness of similar regulations in Colombia since September 1993, when traditional exchange controls were replaced by price-based regulations. It is important to emphasize that the Tobin tax equivalent of such regulations in Colombia has been quite high (13.6% and 6.4% tax for 12 and 36 months loans, respectively, in 1994-1998), and, as in Chile, it is certainly much higher than the rates suggested for an international Tobin tax. The econometric evidence presented indicates that these regulations have been effective in Colombia, both in terms of reducing the volume of flows and in improving the term structure of external borrowing. This indicates that price-based regulations give the authorities some room for maneuver to adopt restrictive monetary policies during international capital market booms. They have also been effective in improving the debt profile of the country, a crucial determinant of macroeconomic risks in the face of busts in the international capital market.
"Good governance" in monetary policy and the negative real effects of inflation targeting in developing economies
Full text linkThis paper analyzes the growth effects of inflation targeting regimes in emerging market economies. In particular, it focuses on the case of three Latin American economies where the inflation targeting framework has been implemented, namely Brazil, Chile and Mexico. It is argued that not only monetary policy is procyclical under inflation targeting, but also that it is likely to react in an asymmetric way to fluctuations in economic activity and exchange rates (too ‘tight’ during recessions, not so ‘loose’ during expansions). Such pattern may generate a downward bias in aggregate demand, with negative long-run real effects on output growth and employment. Our results suggest that monetary policy is procyclical in Brazil and Chile, and countercyclical in Mexico. Also, they suggest that monetary policy has reacted asymmetrically to economic activity in the three countries. The main economic policy implication of this study is that central banks should consider more seriously the effects of monetary policy on output and employment.monetary policy, inflation targeting, economic growth
Capital-Account and Counter-Cyclical Prudential Regulations in Developing Countries
Full text linkcycles, capital flows, prudential regulation, counter-cyclical policies
Why Doesn't Africa Get More Equity Investment? Frontier Stock Markets, Firm Size and Asset Allocations of Global Emerging Market Funds
Full text linkThis paper addresses the question of investment in sub-Saharan African listed securities by examining characteristics of the continent’s 15 equity markets, the rise and fall of African regional funds, and the asset allocation trends for global emerging market (GEM) funds. The data shows that South Africa is now a leading destination of capital, but that few managers invest elsewhere on the continent. However, we find that African markets are not treated differently than other markets and present evidence that small market size and low levels of liquidity are a binding deterrent for foreign institutional investors. Thus, orthodox market variables rather than market failure appear to explain Africa’s low absolute levels of inward equity flows. The paper then turns to new data from firm surveys to explore why African firms remain small. The implications of our findings are threefold: (a) efforts to encourage greater private investment in these markets should concentrate on domestic audiences and specialized regional funds, (b) the depth and success of the Johannesburg Stock Exchange can perhaps be better utilized to benefit other parts of the continent, and (c) any long-term strategy should concentrate on the underlying barriers to firm entry and growth.sub-Saharan African, equity markets, global emerging market,inward equity flows, private investment, Johannesburg Stock Exchange
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