Trade in Financial Services and Capital Movements

22 Pages Posted: 12 Feb 2006

Multiple version iconThere are 2 versions of this paper

Date Written: July 1999

Abstract

International financial liberalization may alter saving-investment imbalances and patterns of capital flows across countries. In a panel of OECD countries for 1990-96, this study examines how the liberalization of capital movements and financial services trade affects net private capital flows. Capital inflows tend to fall (rise) with the liberalization of commercial presence in banking and securities (insurance) services, possibly reflecting an increase (decrease) in saving. Capital account liberalization is found to stimulate capital inflows, suggesting that better access to external financing helps sustain larger fiscal and current account deficits. When cross-border trade is liberalized, capital flows change insignificantly.

Keywords: financial services, capital movement, trade, OECD

JEL Classification: F21, F36, F14

Suggested Citation

Tamirisa, Natalia T., Trade in Financial Services and Capital Movements (July 1999). IMF Working Paper No. 99/89, Available at SSRN: https://ssrn.com/abstract=880616

Natalia T. Tamirisa (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States