Portfolio Inflows Eclipsing Banking Inflows: Alternative Facts?

35 Pages Posted: 12 Mar 2018

See all articles by Eugenio Cerutti

Eugenio Cerutti

International Monetary Fund (IMF); Johns Hopkins University

Gee Hee Hong

International Monetary Fund (IMF)

Date Written: February 2018

Abstract

Superficial examination of aggregate gross cross-border capital inflow data suggests that therewas no substitution between portfolio inflows and bank loans in recent years. However, ournovel analysis of disaggregate inflows (both by types of instrument and borrower) showsinteresting heterogeneity. There has been substitution of bank loans for portfolio debt securitiesnot only in the case of corporate and sovereign borrowers in advanced countries, but alsosovereign borrowers in emerging countries. In the case of corporate borrowers in emergingmarkets, the relationship corresponds to complementarity across types of gross capital inflows,especially during periods of positive capital gross inflows after the global financial crisis. Alarge part of these patterns does not seem to be driven by a common phenomenon acrosscountries associated with the global financial cycle, but rather by country-specific factors.

Keywords: Capital flows, portfolio inflows, bank inflows, global financial cycle, General, Open Economy Macroeconomics, International Policy Coordination and Transmission

JEL Classification: F00, F20, F21, F30, F32, F41, F42, F3

Suggested Citation

Cerutti, Eugenio and Hong, Gee Hee, Portfolio Inflows Eclipsing Banking Inflows: Alternative Facts? (February 2018). IMF Working Paper No. 18/29, Available at SSRN: https://ssrn.com/abstract=3138513

Eugenio Cerutti (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street N.W.
Washington, DC 20431
United States

Johns Hopkins University ( email )

Baltimore, MD 21218
United States

Gee Hee Hong

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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