Index

Abid, Fathi 36 accounting rules 164 Acemoglu, Daron 8 Acharya, Sushant 114, 138, 169 Agbloyor, Elikplimi Komla 35–7, 153, 158 Aghion, Philippe 149 Ahmed, Faisal 116 Ahmed, Shaghil 119 Akerlof, George 74–5, 162 Alcidi, Cinzia 54, 157 Alfaro, Laura 112–13 Allen, Franklin 4–5, 76, 163 Amin, Fouzia 116 Andreasen, Eugenia 117 Annamalh, Sanmugam 116 Arezki, Rabah 116 Argentina 2, 53, 166 Asian Financial Crisis, 1990–1997 1–2, 77, 112, 117 Asiedu, Elizabeth 14 Austria 12, 148 Azman-Saini, W.N.W. 13–14, 147

Back, In-Mee 36 Bahloul, Slah 36 Bakardzhieva, Damyana 36 Baldursson, Fridrik Mar 164 banking crises 4–5; bank governance and 178–9; bank run types and 80–1; foreign portfolio investment and 51, 154–5; liquidity provision and policies to prevent 157; possible causes of bank failure and 76–7; remedies and their concerns 77–80; sudden stops and 54, 56–7, 103–9, 177–8; theoretical framework 55–6 banking debt flows 116 banking system: agents 81–2; facts and issues 72–81; financial markets

and 35–6, 158–9, 166–7; leverage 76–7; liquidity 77–80; objective bank governance 74; remedies for problems 77–80; risk taking in 74–6, 160–1, 163; roles and activities 74–5; subjective bank governance 73–4; supervision and regulations 78–9; theoretical background on governance of 80–1; theoretical framework 81–5 bank-selected fully funded (BSF) banking system 80, 122, 153, 159 Barba Naavaretti, G. 142 Barcinski, Alexandre 120 Belloumi, Mounir 31 Bencivenga, V. R. 8, 15 Bengui, Julien 114, 138, 169 Benigno, Gianluca 115 Ben Naccur, Sami 36 Benzing, Cynthia 121, 169 Berkowitz, Jeremy 76, 163 Bernanke, Ben 164 Berument, M. Hakan 37 Bhattacharya, Mousumi 36, 153 Bhattacharya, Sharad Nath 36, 153 Bijsterbosch, Martin 119 Binichi, Mahir 116, 120 Bitzer, Jurgen 12, 149 Boasson, Vigdis 37 Bodman, Philip 13, 150 Boero, Gianna 36 Bohn, Henning 35 Bordo, Michael D. 5, 53–4, 64, 66, 69–70, 156, 164–5 Borenszrein, E. 147 Boucekkine, Raouf 121, 172 Braconier, H. 12, 142, 149 Brazil 1–2, 112, 116, 118–19, 166 Brink, Nicola 37, 165 Brook, Robin 35 Brunnermeier, Markus K. 115

Callen, Timothy 115 Calomiris, Charles W. 74–5 Calvo, Guillermo A. 53–4 Campion, Mary Kathryn 116 Campos, Nauro F. 26 capital accounts 3 capital controls 1–2, 138; agents 123; on capital inflows 130–4; on capital outflows 134–6; challenges for empirical studies of 165–8; comparison of effectiveness in all cases 137–8; compositions of flows and formats/types of 171–2; effectiveness of 7–10, 137–8, 179; effects of 6–7, 115–20; entrepreneurs and production and 123; factors crucial to effects of 119–20; facts and evidence 111–22; financial stability and 117; format and impacts of 165–6; forms and types of 6–7, 113–14, 171–2; history of 111–12; investors and 124; lack of 136–7; liberalization 120–2, 170; loan market and 126; macroeconomic outcomes 118; mixed results of liberalizations and 4–5; monetary and other autonomy effects 117–18; on and off 166; of other countries 167–8; perfect capital mobility and 114–15; policy implications 169–72; possible theoretical extensions 168–9; results 126–30; theoretical framework 122–6; volumes and composition of capital flows and 116 capital flows 1–3, 34n9, 138, 175–6; banking system without 6; determinants of 112; development of financial/capital markets and 143–4; DSF banking system and 124–6; economic conditions in individual and global economy and 142–3; environment 56–7; facts and effects of 112–13; issues surrounding 53–6; limitation of specific datasets on 3; short-term 9; theoretical framework 55–6; volumes and composition of 116 capital mobility 53; capital controls and perfect 114–15 Cardoso, Eliana 116 Cashin, Paul 115 Castellani, D. 142 Cavallo, Alberto F. 64, 66, 69–70, 156 Ceh, Ana Maria 55 central bank reserves 3 Chakraborty, Debasish 37 Chamon, Marcos 117 Chang, Chia-Ying 15, 77, 122, 157 Chen, Weiyan 27 Chile 118–19, 170 Choong, Chee-Keong 35 Choudhry, Moorad 73 Chung, J.-H. 116 Claessens, Stijn 53 closed economies: DSF and DSL systems in 85–7; foreign direct investment in 20–1; foreign portfolio investment in 42–3 Colombia 1, 112, 119, 166, 170 contagion effects 163 credit booms 54 crises, banking see banking crises Czech Republic 1, 112, 166

Damasceno, Aderbal Oliveira 113 Dang, Tri Vi 75 Darku, Alexander Bilson 118 Das, Khanindra C. 27 David, Antonio C. 119, 170 Debacre, P. 12, 22, 148 Debbiche, Imene 36 Dell’Erba, Salvatore 116 Denaux, Zulal S. 37 deposit insurance 79 depositor-selected fully funded (DSF) banking system 80–1, 109–10, 159, 178–9; capital flows and 124–6; in closed economy 85–7; functioning without uncertainty 84–5; home country in open economy 87–92; host country in open economy 101–3; sudden stops and banking crises 103–9 depositor-selected leveraged (DSL) banking systems 81, 109–10, 159, 178–9; in closed economy 85–7; functioning without uncertainty 84–5; home country in open economy 92–101; host country in open economy 101–3; sudden stops and banking crises 103–9 deregulation, banking 5–6 Dermine, Jean 74, 167 development of financial/capital markets and capital flows 143–4, 158–9, 168–9 Diamond, Douglas W. 8, 77, 80 Disdier, A. C. 142

Dooley, Michael P. 115 Driffield, Nigel 13, 142, 150 DSF see depositor-selected fully funded (DSF) banking system DSL see depositor-selected leveraged (DSL) banking systems Dua, Pami 36 Duasa, Jarita 36, 118 Dunning, J. H. 14 Dybvig, Phillip H. 8, 77, 80 dynamic stochastic general equilibrium (DSGE) model 115

economic growth 146–7; foreign direct investment and 147–53, 176–7; foreign portfolio investment and 158, 177 Edison, Hali J. 120 Edwards, Sebastian 7, 113, 117–18 Eichengreen, Barry 4–5, 7, 119 Ekholm, K. 12 Elia, Stefano 12, 22, 148 El-Shagi, Makram 7, 114, 116 Eng, Yoke-Kee 113 entrepreneurs and production and capital controls 123 equilibrium output 145–6 Errunza, Vihang 35 Estonia 12, 22, 148

failures, possible causes of bank 76–7; see also banking crises fall of currency board 54 FDI see foreign direct investment (FDI) Federal Reserve Bank, U.S. 164 Federico, Stefano 12, 22, 141, 148 Feldstein-Horioka-puzzle 3 Fernandez, Andres 121 financial crises: capital controls and 117; foreign portfolio investment volatility and 37 financial markets: development of 143–4, 158–9, 168–9; foreign portfolio investment and 35–6, 158–9, 166–7 Forbes, Kristin J. 7, 112, 114, 117–18 foreign direct investment (FDI) 3, 9, 175–6; agents 16–17; background and facts on 11–15; banks 17–19; in closed economies 20–1; demographic issues and 152; economic conditions and effects of 142, 151; economic growth and 147–53, 176–7; firms 17, 34n7; gap and contributions of theoretical

analysis of 14–15; heterogeneity of firms and 151–2; home employment and 11–12, 147–9; home productivity and growth and 12–14; human capital and 152; international trade and 152; investment portfolios and 150–1; liberalization of capital controls and 120–1; market frictions and 151; with no return flows 32–3; in open economies in the long run 27–32; in open economies in the short run 21–7; policy implications 152–3; positive effect on host growth 14; possible extensions 151–2; results 19–32; short run home employment and 11–12; technology changes, scale effects and productivity 149–50; theoretical framework 16–19; to-foreign portfolio investment ratio 36 foreign portfolio investment (FPI) 3, 109–10, 175–6; bank runs and 51, 154–5; causality of growth on 156; closed economies 42–3; dependency on foreign capital and 156, 159; development of financial markets and 158–9; economic growth and 158, 177; environment 56–7; facts and issues 35–9; financial friction and risks and 144; financial markets and 35–6, 166–7; flow reallocation and removal of restrictions 161–2; flows 153–9; flows and macro variables 36–7; flows in host countries 155; liberalization of capital controls and 120–1; open economies, long run 47–51; open economies, short run 43–7; in open economy without sudden stops 57–60; other factors with 38; policy implications 157–9; production and debt market and 41–2; results 42–51, 57–69; risk taking and transferring activities 162; stock markets and 37–8; theoretical framework 38–42, 55–6; to-foreign direct investment ratio 36; volatility and financial crises/ risks 37 Fortin, Rich 73 FPI see foreign portfolio investment (FPI) France 142 Fratzscher, Marcel 54, 119 Frost, Jon 113 Fukuda, Shin-ichi 165 Funke, Norbert 116

Furceri, Davide 54 Furnagiev, Steven 117

Gale, Douglas 4–5, 76, 163 Gambacorta, Leonardo 74, 167 Gamberger, Dragan 76 Garcia, Márcio 117 Garcia, Marcio G. P. 120 Garg, Reetika 36 Germany 12, 148 Gertler, Mark 8, 76, 163 Ghazali, Mohd Fahmi 36 Ghosh, Atish R. 119 Giofre, Macla 38 Global Financial Crisis, 2008 10, 112 Gochoco-Bautista, Maria Socorro 36 Goh, Soo Khoon 119 Goldberg, Gerson M. 73 Goldfajin, Ilan 116 Goldstein, Itay 35 Gopinath, Munisamy 27 Gorg, Holger 12, 149 governance, bank 109–10; accounting rules and transparency 164; banking crises and 178–9; banks’ risks and systemic risks and 160–1; challenges for empirical studies of 159–61; contagion effects 163; foreign portfolio investment and 158; heterogeneous banks 162, 164; incentive problems/looting problems 162; liquidity, policies and supervision of 163, 164–5; liquidity provision and 161; objective 74, 160; policy implications 163–5; restricting leveraging/shadow banking activities 163; subjective 73–4 Graham, Michael 114–15, 169 Great Depression 77 Grittersova, Jana 4, 171 Gropp, Reint 79 Gros, Daniel 54, 157 gross domestic product (GDP) 13, 145–6 Gu, Xinhua 115–16 Guichard, Stephanie 54 Gur, Nurullah 35

Hanson, Samuel G. 77 Hartmann, Philipp 74, 167 Hartwell, Christopher A. 113 Hegerty, Scott W. 35 Hellmann, Thomas F. 161, 165 Herzer, D. 12–13, 28, 147, 149 Hijzen, A. 12, 149–50 home employment, foreign direct investment and short run 11–12 home employment and foreign direct investment 147–9 home productivity and growth and foreign direct investment 12–14 Hoshi, Takeo 75 Hovakimian, Armen 74, 167 Howitt, Peter 149 Hsu, Chun-Pin 37–8 Hsu, Hsiao-Tang 37 Huang, Chin-Wen 37–8 Hutchison, Michael 116, 120

Iceland 114–15 Imbriani, C. 12, 141, 148 incentive problems/looting problems 162 India 117 Indonesia 1, 112, 166 Infinite-horizon models 8 inflows, controls on capital 130–4 Inoguchi, Masahiro 120 interest rates 117–18; capital controls and 126–30 International Monetary Fund (IMF) 6, 55, 165 investment portfolios and foreign direct investment 150–1 investors and capital controls 124 Italy 12, 22, 74, 142, 148 Iyer, Rajkamal 77

Japan 75, 148 Jean, S. 12 Jinjarak, Yothin 121 Jones, Charles I. 149 Jones, G. G. 14 Jongwanich, Juthathip 36, 119–20, 170 Jorion, Philippe 163 Joshi, Vijay 117 Joyce, Joseph P. 37, 54–5, 70, 153, 158–9

Kamar, Bassem 36 Kanayo, Ogujiuba 37 Kanczuk, Fabio 113 Kandil, Magda 37 Kane, Edward J. 74 Karolyi, G. Andrew 37 Kashyap, Anil 75, 77 Kassim, Salina H. 36 Kinda, Tidiane 36 Kinoshita, Yuko 26 Kitano, Shigeto 115 Kiyotaki, Nobuhiro 8, 76, 163

Klein, Michael W. 118–19 Knarvik, K.H.M. 12 Kohpaiboon, Archanun 120 Komulainen, Tuomas 53 Korinck, Anton 115 Kose, M. Ayhan 53 Kotrajaras, Polpat 152 Krznar, Ivo 55 Kyaw, Khine S. 36

Laeven, Luc 74 Lajuni, Nelson 36 Lam, Siew-Yong 35 Landon-Lane, John 164–5 La Porta, Rafael 73 Le, Thanh 13, 150 Lee, Chi-Chuan 36 Lee, Chien-Chiang 36 Lee, Gwanghoon 13, 30, 150 Lee, H. 12, 22, 148 Lee, Hsiu-Yun 12, 22, 148 Lee, Hyun-Hoon 37–8, 165 Lee, J. 12, 22, 148 Lee, John-Wha 36 lender of last resort (LOLR) 79 leverage 76–7; restrictions 163 liberalizations: capital controls 120–2, 170; mixed results of controls and 4–5; role change of the banking systems and 5–6 Lin, Kenneth S. 12 Lipsey, Robert E. 12, 148 liquidity 77–8; bank governance and 163–5; provision 79–80, 157, 161 Liu, Zheng 115 Love, J. H. 142

macro variables: capital controls and 118, 121; effects of sudden stops on 54–5; foreign portfolio investment flows and 36–7 Magud, Nicolas 7–8, 113, 115, 122 Malaysia 1–2, 36, 112, 116, 119–20, 166 Marin, D. 12, 22, 79, 148 Mariotti, Ilaria 12 market efficiency 114 Masso, Jaan 12, 22, 148 Mavromatis, Kostas 36 Mayer, T. 12 Meissner, Christopher M. 64, 66, 69–70, 156 Mencinger, Joze 13–14, 25–6, 147 Mendoza, Enrique G. 54 Michaud, Amanda 115 Minerva, Gaetano Alfredo 12, 22, 141, 148 Mitchener, Kris James 118 Molnar, Margit 12, 116, 148 monetary autonomy and capital controls 117–18 Montiel, Peter 113, 116, 168, 171–2 Moore, John 163 moral hazards 165 Mosley, Paul 118 multinational enterprises (MNEs) 12, 14, 34n2, 148–50 Murdock, Kevin C. 161, 165

Nabar, Malhar 54–5, 70, 153, 158–9 Nachum, L. 14 Narula, Rajneesh 13, 150 Neumann, Rebecca M. 116 Ni, S. 116 non-relocated entrepreneurs and production 82 Noy, Ilan 121 Ntoko, Alfred 37–8 Nunnenkamp, Peter 13–14, 26, 147

objective bank governance 74, 160 O’Brien, James M. 76, 163 on and off capital controls 166 open economies: foreign direct investment, long run 27–32; foreign direct investment, short run 21–7; foreign portfolio investment, long run 47–51; foreign portfolio investment, short run 43–7; with FPI flows without sudden stops 57–60 Orlov, Alexei G. 171 Ostry, Jonathan D. 119 outflows, controls on capital 134–6 output: equilibrium 145–6; losses 54 overlapping-generations models 8

Padoan, Pier Carlo 53 Pain, Nigel 12 Pareto Optimality 78, 115 Park, Daekeun 113, 119 Park, Donghyun 38 Pasricha, Gurnain Kaur 120–1 Peltomaki, Jarkko 114–15 Peni, Emilia 74

perfect capital mobility and capital controls 114–15 Philippines, the 1, 112, 166 Piscitello, Lucia 12 Pittiglio, R. 12, 141, 148 Plesoianu, Anita 37 Popov, Alexander 35–7, 153, 158 Portes, Richard 5, 164 portfolio debt investment flows 116 Poshakwale, Sunil S. 36–7 productivity and foreign direct investment 149–50 Puri, Manju 77

Qureshi, Mahvash 119

Rahmouni, Oubeid 36 Ramos-Tallada, Julio 117 Ratanamancichat, Chiratus 54, 64, 66, 69–70, 154 Razin, Assaf 14, 29, 35 Reganati, F. 12, 141, 148 Reinhardt, Dennis 116 Reinhart, Carmen M. 7–8, 113, 115–16, 122, 168, 171–2 Reitz, Stefan 117 Resende, Marco Flavio da Cunha 116–17 return flows and foreign direct investment 32–3 risk-taking by banks 74–6, 160–1, 163; reducing systemic 164 Rodrik, Dani 113 Romer, Paul 74–5, 162 Rose, Andrew 119 Roth, Greg 73 Rothert, Jacek 115 Rousova, Linda 53 Rusticelli, Elena 54 Ryan, Nicolas 77

Sannikov, Yuliy 115 scale effects and foreign direct investment 149–50 Scharfstein, David 75 Schindler, Martin 116–17, 120 Schularick, Moritz 76 shadow banking restrictions 163 Shambaugh, Jay C. 119 Shawa, Moses Joseph 31 Shen, Chung-Hua 36 Shen, Yao 31, 153, 158 Sheng, Li 115–16 short-run and long-run empirical analysis 144–5 short-term lending facilities (SRLF) 79 Slovenia 30 Smith, B. D. 8, 15 Smuc, Tomislav 76 South Africa 116 Spain 2, 112, 166 Spiegel, Mark M. 115 Stiglitz, Joseph E. 161, 165 stock markets and foreign portfolio investment 37–8 Stractmans, Stefan 74 Stulz, René M. 73, 78 Sturludottir, Hildur 114–15 subjective bank governance 73–4 sudden stops 9–10, 70; banking crises and 54, 103–9, 177–8; causes of 53; effects on macro variables 54–5; environment 56–7; foreign portfolio investment and causes of 155–7; long run period after 66–9; results 57–69; short run period after 60–6; theoretical framework 55–6 supervision and regulation, bank 78–9 systemic risks 164

Taglioni, Daria 12 Takaku, Kenya 115 Tamirisa, Natalia T. 120 Taylor, Alan M. 76 Taylor, K. 142 Taylor, Mark P. 36 technology changes and foreign direct investment 149–50 Terrones, Marco E. 54 Tesar, Linda L. 35 Thailand 1–2, 36, 112, 119, 166 Thapa, Chandra 36–7 theoretical and empirical analysis: bank governance 159–65; capital controls 165–72; development of financial/ capital markets 143–4; economic conditions in individual and global economy 142–3, 151; economic growth 146–7; equilibrium output 145–6; financial frictions and risks 144; foreign direct investment and growth 147–53; foreign portfolio investment flows 153–9; home and host 141; introduction to 140; lessons

141–7, 179–80; selection of time and industries for 141; short-run and long-run effects 144–5 Tirole, Jean 5 Todea, Alexandru 37 transparent banking activities 164 Tsomocos, Dimitrios P. 77 Tsui, Hsiao-Chien 12

Uctum, Merih 37, 165 Uctum, Remzi 37, 165 United Kingdom 142 United States 148, 164

Vadoulakis, Alexandros P. 77 Vahamaa, Sami 74 Valenzuela, Patricío 117 Vannapanich, Kunlavee 55, 64, 66, 69–70, 154 Velasco, Andres 113 Verdier, Geneviève 112 Vesala, Jukka 79 Viviers, Wilma 37, 165 volatility: foreign portfolio investment 37; long run foreign deposit investment flows 116

wage income and foreign direct investment 147–9 Wandschneider, Kirsten 118 Warnock, Francis E. 7, 112, 120 welfare analysis 115 Wibaut, Serge 116 Williams, Barry 74, 167 Wong, Chin-Yoong 113

Yee, Ooi Ai 36 Yepez Albornoz, Juan Francisco 119 You, Yu 119–20, 172 Young, Alwyn 149 Yusop, Zulkornain 35

Zhang, Kevin Honglin 13, 147 Zheng, Huanhuan 121 Zlate, Andrei 119