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Flight Capital as a Portfolio Choice
Author:
Anke Hoeffler null

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Ms. Catherine A Pattillo
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Mr. Paul Collier null

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Series:
IMF Working Papers
Volume/Issue:
Volume 1999: Issue 171
Language:
English
Publication Date:
01 Dec 1999
DOI:
https://doi.org/10.5089/9781451858488.001
ISBN:
9781451858488
ISSN:
1018-5941
Pages:
33
Keywords:
WP; institutional investor; risk rating; increases in capital capital flight; capital flight literature; rate of return; Capital flight; portfolio choice; capital flight share; cline capital flight measure; flight capital; Capital outflows; Stocks; Foreign assets; Real exchange rates; East Asia; Africa; Sub-Saharan Africa; South Asia; Middle East
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper sets flight capital in the context of portfolio choice, focusing upon the proportion of private wealth that is held abroad. There are large regional differences in this proportion, ranging from 5 percent in South Asia to 40 percent in Africa. We explain cross-country differences in portfolio choice by variables that proxy differences in the risk-adjusted rate of return on capital. We apply the results to four policy questions: how the East Asian crisis affected domestic capital outflows; herd effects; the effect of the IMF-World Bank debt relief initiative for heavily-indebted poor countries (HIPC) on capital repatriation; and why so much of Africa’s private wealth is held outside the continent.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund