Microeconomic Effects of Capital Controls: The Chilean Experience During the 1990s

International Journal of Finance & Economics, Vol. 8, pp. 225-253, 2003

Posted: 3 Dec 2010

See all articles by Francisco A. Gallego

Francisco A. Gallego

Pontificia Universidad Catolica de Chile

Leonardo Hernandez

Central Bank of Chile

Date Written: July 7, 2003

Abstract

This paper provides empirical evidence on some of the microeconomic effects of the capital controls introduced in Chile during the 1990s, in particular, the unremunerated reserve requirement (URR). By looking at financial statements for a group of 73 Chilean firms during 1986–2001, the paper attempts to identify the effects of the URR on the firms' costs and ways of financing. Results show that the effects of the URR are firm specific; for instance, there are striking differences in the response to the URR among firms of different size and those with or without access to international capital markets.

Keywords: Capital controls, financial structure

Suggested Citation

Gallego, Francisco A. and Hernandez, Leonardo, Microeconomic Effects of Capital Controls: The Chilean Experience During the 1990s (July 7, 2003). International Journal of Finance & Economics, Vol. 8, pp. 225-253, 2003. Available at SSRN: https://ssrn.com/abstract=1718557

Francisco A. Gallego (Contact Author)

Pontificia Universidad Catolica de Chile ( email )

Casilla 76
Correo 17
Santiago
Chile

HOME PAGE: http://www.economia.puc.cl/fgallego

Leonardo Hernandez

Central Bank of Chile

Agustinas 1180
Santiago
Chile

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