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WHAT DRIVES CAPITAL FLOWS TO EMERGING MARKETS? A SURVEY OF THE EMPIRICAL LITERATURE
Author(s) -
Koepke Robin
Publication year - 2019
Publication title -
journal of economic surveys
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.657
H-Index - 92
eISSN - 1467-6419
pISSN - 0950-0804
DOI - 10.1111/joes.12273
Subject(s) - economics , capital flows , portfolio , emerging markets , empirical evidence , financial economics , equity (law) , capital asset pricing model , economic capital , monetary economics , cost of capital , asset (computer security) , capital (architecture) , macroeconomics , microeconomics , human capital , market economy , profit (economics) , history , philosophy , computer security , archaeology , epistemology , political science , computer science , law
This paper reviews the rapidly growing empirical literature on the drivers of capital flows to emerging markets. The empirical evidence is structured based on the recognition that the drivers of capital flows vary over time and across different types of capital flows. The drivers are classified using the traditional distinction between ‘push’ and ‘pull’ drivers, which continues to serve as a useful framework. Push factors like global risk aversion and external interest rates are found to matter most for portfolio debt and equity flows, but somewhat less for banking flows. Pull factors such as domestic output growth, asset returns and country risk matter for all three capital flows components, but most for banking flows.