Cover IMF Working Papers
Buy Book in Print
Changing Times for Frontier Markets: A Perspective from Portfolio Investment Flows and Financial Integration
Author:
Nordine Abidi null

Search for other papers by Nordine Abidi in
Current site
Google Scholar Close
,
Ms. Burcu Hacibedel
Search for other papers by Ms. Burcu Hacibedel in
Current site
Google Scholar Close
, and
Ms. Mwanza Nkusu
Search for other papers by Ms. Mwanza Nkusu in
Current site
Google Scholar Close
Series:
IMF Working Papers
Volume/Issue:
Volume 2016: Issue 177
Language:
English
Publication Date:
23 Aug 2016
DOI:
https://doi.org/10.5089/9781475529548.001
ISBN:
9781475529548
ISSN:
1018-5941
Pages:
37
Keywords:
WP; global bond; portfolio flow; market beta; crisis dummy; Frontier Markets; Portfolio flows; Financial Integration; Balance of Payments Needs; FM group; qualification criteria; integration Hypothesis; FM bond; segmentation hypothesis; FMS relative; Capital flows; Private capital flows; Emerging and frontier financial markets; 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.
Download PDF (2.5 MB) Download Epub
This paper investigates to what extent low-income developing countries (LIDCs) characterized as frontier markets (FMs) have begun to be subject to capital flows dynamics typically associated with emerging markets (EMs). Using a sample of developing countries covering the period 2000–14, we show that: (i) average annual portfolio flows to FMs as a share of GDP outstripped those to EMs by about 0.6 percentage points of GDP; (ii) during years of heightened stress in global financial markets, portfolio flows to FMs dried up like those to EMs; and that (iii) FMs have become more integrated into international financial markets. Our findings confirm that, in terms of portfolio flows, FMs have become more similar to EMs than to the rest of LIDCs and are therefore more vulnerable to swings in global financial markets conditions. Accordingly, it is important to have in place frameworks to strengthen FMs’ resilience to adverse capital flows shocks.
  • Collapse
  • Expand
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund