Capital Flow Waves to and from Switzerland before and after the Financial Crisis

40 Pages Posted: 25 Nov 2014 Last revised: 26 Nov 2014

Date Written: November 24, 2014

Abstract

This paper first shows that capital inflows to and outflows from financial centers were disproportionately affected by the global financial crisis. Switzerland was no exception. The paper then identifies waves of capital flows to and from Switzerland from 2000:Q1 to 2014:Q2 by using a simple statistical method. The analysis shows that private capital inflows to and outflows from Switzerland have become exceptionally muted and less volatile since the crisis. Further, strong and long-lasting 'home bias' behavior can be observed for both Swiss and foreign investors. By contrast, net private capital flows have shown significantly higher volatility since the financial crisis, frequently registering extreme movements driven by extreme movements in bank lending flows. These findings suggest that the financial crisis generated a breaking point for capital flows to and from Switzerland.

Keywords: private capital flows, inflows, outflows, surges, stops, retrenchment, flight

JEL Classification: F21, F31, F32

Suggested Citation

Yeşin, Pınar, Capital Flow Waves to and from Switzerland before and after the Financial Crisis (November 24, 2014). Available at SSRN: https://ssrn.com/abstract=2530412 or http://dx.doi.org/10.2139/ssrn.2530412

Pınar Yeşin (Contact Author)

Swiss National Bank ( email )

Boersenstrasse 15, P.O.Box
Zurich, CH-8022
Switzerland
41-58-631-3969 (Phone)

HOME PAGE: http://www.pinaryesin.com

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