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Cross-Border Listings, Capital Controls, and U.S. Equity Flows to Emerging Markets
Author:
Ms. Hali J Edison
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Mr. Francis E. Warnock null

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Series:
IMF Working Papers
Volume/Issue:
Volume 2003: Issue 236
Language:
English
Publication Date:
01 Dec 2003
DOI:
https://doi.org/10.5089/9781451875706.001
ISBN:
9781451875706
ISSN:
1018-5941
Pages:
43
Keywords:
WP; capital control; equity flow; market equities; flows data; portfolio equity flows; capital flows; emerging markets; ADRs; flows datum; emerging market equity; capital controls lead; emerging market borrowing costs; portfolio equity; composite index; model capital control; tic flows datum; U.S. Treasury International; emerging markets sample; Capital controls; Stocks; Emerging and frontier financial markets; Market capitalization; Asia and Pacific; Global
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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We analyze capital flows to emerging markets in a framework that incorporates two quantitative measures of financial integration, the intensity of capital controls and the extent of cross border listings, while controlling for traditional global (push) and country specific (pull) factors. Two important results emerge. First, the cross listing of an emerging market firm on a U.S. exchange is an important but short lived capital flows event, suggesting that the cross listed stock is in effect a new security that U.S. investors quickly bring into their portfolios. Second, the effect of financial liberalization on capital flows is more nuanced than is suggested by event studies: A reduction in capital controls results in increased inflows only when the controls are binding. Among the standard push and pull factors, global factors are important-slack U.S. economic activity is associated with increased flows to emerging markets-and U.S. investors appear to chase expected, but not past, returns.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund