Cover IMF Working Papers
Capital Controls and the Cost of Debt
Author: Eugenia Andreasen, Mr. Martin Schindler, and Mr. Patricio A Valenzuela
Series:
IMF Working Papers
Volume/Issue:
Volume 2017: Issue 135
Language:
English
Publication Date:
09 Jun 2017
DOI:
https://doi.org/10.5089/9781484303313.001
ISBN:
9781484303313
ISSN:
1018-5941
Pages:
26
Keywords:
WP; capital account restriction; firm; bond; control; capital account; risk diversification; operating income; bond market market capitalization; debt capital; short-term debt; market illiquidity; Capital account; Capital controls; Corporate bonds; Bonds; Yield curve; Global
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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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Using a panel data set for international corporate bonds and capital account restrictions in advanced and emerging economies, we show that restrictions on capital inflows produce a substantial and economically meaningful increase in corporate bond spreads. A number of heterogeneities suggest that the effect of capital controls on inflows is particularly strong for more financially constrained firms, establishing a novel channel through which capital controls affect economic outcomes. By contrast, we do not find a robust significant effect of restrictions on outflows.
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund