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Abstract

This paper presents the annual survey of international capital market developments and prospects. It summarizes recent developments in capital market flows and asset prices, including the initial impact of the Middle East crisis, and reviews the main ongoing structural changes in financial markets. A sharp fall in net investment in foreign securities by Japanese institutions in 1990, in the face of narrowing interest rate differentials and, in some cases, the need to cover losses stemming from the fall in the Japanese stock market. In contrast, the importance of net direct investment outflows as a counterpart to the current account surplus began increasing as from 1989. The crisis in the Middle East resulted in a further tightening of market conditions, especially for less creditworthy borrowers. A general preference for safer and more liquid financial instruments was reflected in increased spreads between corporate and government securities on national markets and between private sector Eurobonds and government securities denominated in the same currency on international markets.

References

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    • Export Citation
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    • Export Citation
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    • Export Citation
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    • Search Google Scholar
    • Export Citation
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    • Export Citation
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    • Export Citation
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    • Export Citation
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    • Export Citation
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    • Export Citation
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    • Search Google Scholar
    • Export Citation
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    • Export Citation
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    • Search Google Scholar
    • Export Citation
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    • Search Google Scholar
    • Export Citation
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  • Gorton, G.,Bank Suspension of Convertibility,Journal of Monetary Economics (Amsterdam), Vol. 15 (March 1985), pp. 17793.

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    • Export Citation
  • Heller, Robert, “Preventing Future Stock Market Collapses,” remarks delivered at the Commonwealth Club of California in San Francisco on October 27, 1989.

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    • Export Citation
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    • Search Google Scholar
    • Export Citation
  • International Monetary Fund, International Capital Markets: Developments and Prospects, World Economic and Financial Surveys (Washington, 19—).

    • Search Google Scholar
    • Export Citation
  • International Monetary Fund, World Economic Outlook: A Survey by the Staff of the International Monetary Fund, World Economic and Financial Surveys (Washington, 19—).

    • Search Google Scholar
    • Export Citation
  • International Organization of Securities Commission (IOSCO). “Capital Requirements for Multinational Securities” (Santiago, November 1990).

    • Search Google Scholar
    • Export Citation
  • Jacklin, C.J., and S. Bhattacharya,Distinguishing Panics and Information-Based Bank Runs: Welfare and Policy Implications,Journal of Political Economy (Chicago), Vol. 96 (June 1988) pp. 56892.

    • Search Google Scholar
    • Export Citation
  • Johnson, G.G., Mathew Fisher, and Elliott Harris, Officially Supported Export Credits: Developments and Prospects, World Economic and Financial Surveys (Washington: International Monetary Fund, May 1990).

    • Search Google Scholar
    • Export Citation
  • Kaufman, G.G.,Bank Runs: Causes, Benefits, and Costs,Cato Journal (Washington, D.C.), Vol. 7 (Winter 1988), pp. 55987.

  • Keeley, M.C.,Deposit Insurance, Risk, and Market Power in Banking,American Economic Review (Nashville), Vol. 80 (December 1990), pp. 11831200.

    • Search Google Scholar
    • Export Citation
  • Kindleberger, CP., Manias, Panics, and Crashes: A History of Financial Crises (New York: Basic Books, 1978).

  • Mathieson, Donald J., and D. Folkerts-Landau,Innovation, Institutional Changes, and Regulatory Response in International Financial Markets,” in Restructuring Banking and Financial Services in America, ed. by W.S. Haraf and R.M. Kushmeider (Washington: American Enterprise Institute, 1988) pp. 392423.

    • Search Google Scholar
    • Export Citation
  • Romer, C.D.,The Great Crash and the Onset of the Great Depression,Quarterly Journal of Economics (Cambridge, Massachusetts), Vol. 105 (August 1990), pp. 597624.

    • Search Google Scholar
    • Export Citation
  • Saunders, A.,The Inter-Bank Market, Contagion Effects and International Financial Crises,” in Threats to International Financial Stability, ed. by R. Portes and A.K. Swoboda (Cambridge: Cambridge University Press, 1987), pp. 196232.

    • Search Google Scholar
    • Export Citation
  • Schwartz, A.J.,Financial Stability and the Federal Safety Net,” in Restructuring Banking and Financial Services in America, ed. by W.S. Haraf and R.M. Kushmeider (Washington: American Enterprise Institute, 1988), pp. 3462.

    • Search Google Scholar
    • Export Citation
  • Solow, R.M.,On the Lender of Last Resort,” in Financial Crises: Theory, History, and Policy, ed. by C.P. Kindleberger and J.-P. Laffargue (Cambridge: Cambridge University Press, 1982), pp. 23748.

    • Search Google Scholar
    • Export Citation
  • Stone, Mark,Are Sovereign Debt Secondary Market Returns Sensitive to Macroeconomic Fundamentals? Evidence from the Contemporary and Interwar Markets,IMF Working Paper No. WP/90/69 (unpublished, Washington: International Monetary Fund, 1990).

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    • Export Citation
  • Timberlake, R.H.,The Central Banking Role of Clearing House Associations,Journal of Money, Credit and Banking (Columbus), Vol. 41 (February 1984), pp. 115.

    • Search Google Scholar
    • Export Citation
  • United States, Congress, Budget Office, Reforming Federal Deposit Insurance, Appendix B (Washington: Government Printing Office, September 1990).

    • Search Google Scholar
    • Export Citation
  • World Institute for Development Economic Research (WIDER), Foreign Portfolio Investment in Emerging Equity Markets, Study Group Series, No. 5 (Helsinki, March 1990).

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WORLD ECONOMIC AND FINANCIAL SURVEYS

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Note: For information on the titles and availability of World Economic and Financial Surveys published prior to 1988, please consult the most recent IMF Publications Catalog or contact IMF Publication Services.
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International Capital Markets 1991
  • Basle Committee on Banking Supervision (1990a), “Measuring and Controlling Large Credit Exposure,paper circulated at Sixth International Conference of Banking Supervisors, Frankfurt, October 1990.

    • Search Google Scholar
    • Export Citation
  • Basle Committee on Banking Supervision (1990b), Report on International Developments in Banking Supervision, Report No. 7 (Basle, September 1990).

    • Search Google Scholar
    • Export Citation
  • Bernanke, B.S.,Irreversibility, Uncertainty, and Cyclical Investment,Quarterly Journal of Economics (Cambridge, Massachusetts), Vol. 98 (February 1983), pp. 85106.

    • Search Google Scholar
    • Export Citation
  • Bernanke, B.S., and M. Gertler,Financial Fragility and Economic Performance,Quarterly Journal of Economics (Cambridge, Massachusetts), Vol. 105 (February 1990), pp. 87114.

    • Search Google Scholar
    • Export Citation
  • Bhattacharya, S., and D. Gale,Preference Shocks, Liquidity, and Central Bank Policy,” in New Approaches to Monetary Economics, ed. by W.A. Barnett and K.J. Singleton (Cambridge, Massachusetts: Cambridge University Press, 1987), pp. 6988.

    • Search Google Scholar
    • Export Citation
  • Board of Governors of the Federal Reserve System, The Federal Reserve System: Purposes and Functions (Washington: Board of Governors of the Federal Reserve System, 1984).

    • Search Google Scholar
    • Export Citation
  • Boehmer, Ekkehart, and William Megginson, Determinants of Secondary Market Prices for Developing Country Syndicated Loans,Journal of Finance (New York), Vol. 45 (December 1990), pp. 151740.

    • Search Google Scholar
    • Export Citation
  • Chari, V.V., and R. Jagannathan,Banking Panics, Information, and Rational Expectations Equilibrium,Journal of Finance (New York), Vol. 43 (July 1988), pp. 74961.

    • Search Google Scholar
    • Export Citation
  • Corrigan, Gerald E.,Reforming the U.S. Financial System: An International Perspective,Quarterly Review, Federal Reserve Bank of New York (New York), Vol. 15 (Spring 1990), pp. 114.

    • Search Google Scholar
    • Export Citation
  • Cukierman, A.,The Effects of Uncertainty on Investment Under Risk Neutrality with Endogenous Information,Journal of Political Economy (Chicago), Vol. 87 (June 1980), pp. 46275.

    • Search Google Scholar
    • Export Citation
  • Davis, E.P.,Instability in the Euromarkets and the Economic Theory of Financial Crisis,Bank of England Discussion Paper, No. 43 (October 1989).

    • Search Google Scholar
    • Export Citation
  • Eichengreen, Barry, and Peter H. Lindert, eds., The International Debt Crisis in Historical Perspective (Cambridge, Massachusetts: MIT Press, 1989).

    • Search Google Scholar
    • Export Citation
  • Federal Deposit Insurance Corporation, Federal Deposit Insurance Corporation: The First Fifty Years (Washington, 1984), pp. 5379.

  • Federal Deposit Insurance Corporation, “Failure Resolution,” Chapter 7 in “Deposit Insurance for the Nineties: Meeting the Challenge” (mimeographed, Washington, January 4, 1989).

    • Search Google Scholar
    • Export Citation
  • Financial System Research Council, “On a New Japanese Financial System” (Tokyo, July 13, 1990).

  • Folkerts-Landau, D.The Changing Role of International Bank Lending in Development Finance,Staff Papers International Monetary Fund (Washington), Vol. 32 (June 1985), pp. 31763.

    • Search Google Scholar
    • Export Citation
  • Folkerts-Landau, D. (1990a), “The Case for International Coordination of Financial Policy,” in International Policy Coordination and Exchange Rate Fluctuations, ed. by W.N. Branson, J.A. Frenkel, and M. Goldstein (Chicago: University of Chicago Press, 1990).

    • Search Google Scholar
    • Export Citation
  • Folkerts-Landau, D. (1990b), “Systemic Financial Risk in Payment Systems,IMF Working Paper No. WP/90/65 (unpublished, Washington: International Monetary Fund, July 1990).

    • Search Google Scholar
    • Export Citation
  • Frenkel, Jacob A., and others, eds., Analytical Issues in Debt (Washington: International Monetary Fund, 1989).

  • Fries, S.M.,Issues in Deposit Insurance Reform and Regulation of Depository Institutions,IMF Working Paper No. WP/90/74 (unpublished, Washington: International Monetary Fund, August 1990).

    • Search Google Scholar
    • Export Citation
  • Froot, Kenneth, and Paul Krugman, “Market-Based Debt Reduction for Developing Countries: Principles and Prospects” (unpublished, Washington, 1990)

    • Search Google Scholar
    • Export Citation
  • Fundamental Research Committee of the Securities and Exchange Council, “Restructuring Japan’s Capital Market: Toward an International Market” (Tokyo, June 15, 1990).

    • Search Google Scholar
    • Export Citation
  • Furlong, F. T., and M.C. Keeley,Capital Regulation and Risk Taking: A Note,Journal of Banking and Finance (Amsterdam), Vol. 13 (December 1989), pp. 88391.

    • Search Google Scholar
    • Export Citation
  • Goodfriend, M., and R.G. King,Financial Deregulation, Monetary Policy, and Central Banking,” in Restructuring Banking and Financial Services in America, ed. by W.S. Haraf and R.M. Kushmeider (Washington: American Enterprise Institute, 1988), pp. 21653.

    • Search Google Scholar
    • Export Citation
  • Goodhart, C.A.E.,Why Do Banks Need a Central Bank?Oxford Economic Papers (London), Vol. 39 (March 1987), pp. 7589.

  • Gorton, G.,Bank Suspension of Convertibility,Journal of Monetary Economics (Amsterdam), Vol. 15 (March 1985), pp. 17793.

  • Gorton, G.,Banking Panics and Business Cycles,Oxford Economic Papers (London), Vol. 40 (December 1988), pp. 75181.

  • Greenspan, Alan,Statement by Allen Greenspan, Chairman, Board of Governors of the Federal Reserve System,Federal Reserve Bulletin (Washington), Vol. 76 (November 1990), pp. 91727.

    • Search Google Scholar
    • Export Citation
  • Heller, Robert, “Preventing Future Stock Market Collapses,” remarks delivered at the Commonwealth Club of California in San Francisco on October 27, 1989.

    • Search Google Scholar
    • Export Citation
  • International Monetary Fund, Determinants and Systemic Consequences of International Capital Flows, Occasional Paper No. 77 (Washington, 1991).

    • Search Google Scholar
    • Export Citation
  • International Monetary Fund, International Capital Markets: Developments and Prospects, World Economic and Financial Surveys (Washington, 19—).

    • Search Google Scholar
    • Export Citation
  • International Monetary Fund, World Economic Outlook: A Survey by the Staff of the International Monetary Fund, World Economic and Financial Surveys (Washington, 19—).

    • Search Google Scholar
    • Export Citation
  • International Organization of Securities Commission (IOSCO). “Capital Requirements for Multinational Securities” (Santiago, November 1990).

    • Search Google Scholar
    • Export Citation
  • Jacklin, C.J., and S. Bhattacharya,Distinguishing Panics and Information-Based Bank Runs: Welfare and Policy Implications,Journal of Political Economy (Chicago), Vol. 96 (June 1988) pp. 56892.

    • Search Google Scholar
    • Export Citation
  • Johnson, G.G., Mathew Fisher, and Elliott Harris, Officially Supported Export Credits: Developments and Prospects, World Economic and Financial Surveys (Washington: International Monetary Fund, May 1990).

    • Search Google Scholar
    • Export Citation
  • Kaufman, G.G.,Bank Runs: Causes, Benefits, and Costs,Cato Journal (Washington, D.C.), Vol. 7 (Winter 1988), pp. 55987.

  • Keeley, M.C.,Deposit Insurance, Risk, and Market Power in Banking,American Economic Review (Nashville), Vol. 80 (December 1990), pp. 11831200.

    • Search Google Scholar
    • Export Citation
  • Kindleberger, CP., Manias, Panics, and Crashes: A History of Financial Crises (New York: Basic Books, 1978).

  • Mathieson, Donald J., and D. Folkerts-Landau,Innovation, Institutional Changes, and Regulatory Response in International Financial Markets,” in Restructuring Banking and Financial Services in America, ed. by W.S. Haraf and R.M. Kushmeider (Washington: American Enterprise Institute, 1988) pp. 392423.

    • Search Google Scholar
    • Export Citation
  • Romer, C.D.,The Great Crash and the Onset of the Great Depression,Quarterly Journal of Economics (Cambridge, Massachusetts), Vol. 105 (August 1990), pp. 597624.

    • Search Google Scholar
    • Export Citation
  • Saunders, A.,The Inter-Bank Market, Contagion Effects and International Financial Crises,” in Threats to International Financial Stability, ed. by R. Portes and A.K. Swoboda (Cambridge: Cambridge University Press, 1987), pp. 196232.

    • Search Google Scholar
    • Export Citation
  • Schwartz, A.J.,Financial Stability and the Federal Safety Net,” in Restructuring Banking and Financial Services in America, ed. by W.S. Haraf and R.M. Kushmeider (Washington: American Enterprise Institute, 1988), pp. 3462.

    • Search Google Scholar
    • Export Citation
  • Solow, R.M.,On the Lender of Last Resort,” in Financial Crises: Theory, History, and Policy, ed. by C.P. Kindleberger and J.-P. Laffargue (Cambridge: Cambridge University Press, 1982), pp. 23748.

    • Search Google Scholar
    • Export Citation
  • Stone, Mark,Are Sovereign Debt Secondary Market Returns Sensitive to Macroeconomic Fundamentals? Evidence from the Contemporary and Interwar Markets,IMF Working Paper No. WP/90/69 (unpublished, Washington: International Monetary Fund, 1990).

    • Search Google Scholar
    • Export Citation
  • Timberlake, R.H.,The Central Banking Role of Clearing House Associations,Journal of Money, Credit and Banking (Columbus), Vol. 41 (February 1984), pp. 115.

    • Search Google Scholar
    • Export Citation
  • United States, Congress, Budget Office, Reforming Federal Deposit Insurance, Appendix B (Washington: Government Printing Office, September 1990).

    • Search Google Scholar
    • Export Citation
  • World Institute for Development Economic Research (WIDER), Foreign Portfolio Investment in Emerging Equity Markets, Study Group Series, No. 5 (Helsinki, March 1990).

    • Search Google Scholar
    • Export Citation