- Additional Authors
- Description
- 38 p.; 21 x 29.7cm.
- Summary
- This paper provides an empirical investigation of the relationship between surges in capital inflows and the probability of subsequent banking, currency and balance-of-payment crises. Using a panel of developed and emerging economies from 1970 to 2007, it is shown that a large capital inflow episode increases substantially the probability of having a banking or a currency crisis in the two following years. The effect is especially large for the case of balance-of-payment crises. The paper also finds that the effect of large capital inflows is different depending on the type of flows characterising the episode. In particular, large capital inflows that are debt-driven significantly increase the probability of banking, currency and balance of payment crises, whereas if inflows are driven by equity portfolio investment or FDI there is a negligible effect. This means that structural reforms that modify the composition of capital flows towards a lower share of debt are likely to reduce the financial vulnerabilities to large capital inflows. At the same time, however, structural reforms may also increase the overall size of capital flows.
- Series Statement
- OECD Economics Department Working Papers, 1815-1973 ; no.865
- Uniform Title
- OECD Economics Department Working Papers, no.865.
- Subject
- Economics
- LCCN
- 10.1787/5kgc9kpkslvk-en
- OCLC
- oecd-lib-001078
- Author
Furceri, Davide.
- Title
Episodes of Large Capital Inflows and the Likelihood of Banking and Currency Crises and Sudden Stops [electronic resource] / Davide Furceri, Stéphanie Guichard and Elena Rusticelli
- Imprint
Paris : OECD Publishing, 2011.
- Series
OECD Economics Department Working Papers, 1815-1973 ; no.865
OECD Economics Department Working Papers, 1815-1973 ; no.865.
- Connect to:
- Indexed Term
Economics
- Added Author
Guichard, Stéphanie.
Rusticelli, Elena.
- Other Standard Identifier
10.1787/5kgc9kpkslvk-en doi