No Access
WHAT HINDERS CROSS-BORDER PORTFOLIO INVESTMENT IN EAST ASIA?
https://doi.org/10.1142/S0217590813500124Cited by:1 (Source: Crossref)
Abstract
We examine statistical importance of a number of institutional factors, which have been alleged by market investors and policy commentators as significant barriers on cross-border portfolio investment in East Asian economies, but never been put to empirical tests yet. Taking advantage of the novel data set constructed by the ABMI-GoE, we empirically investigate the explanatory power of such institutional factors as market access-hindering regulations, foreign exchange controls, credit controls, taxation and inefficient post-trading infrastructure. We find that these alleged barriers indeed have significantly negative impacts on cross-border portfolio investment in East Asian economies. In addition, we find some support for the "pecking order" hypothesis in barriers on cross-border portfolio investment in the sense that barriers on post-trading efficiency and cost barriers are not effective unless barriers on market access are significantly lowered.
Keywords:
JEL: F3, G15
References
- Arner, D, P Lejot and SG Rhee (2005). Impediments to cross-border investments in Asian bonds, Paper presented at the Conference on developing bond markets in APEC toward greater public-private sector partnership, June 21–22, Tokyo, Japan . Google Scholar
- World Bank Economic Review 9 , 75 ( 1995 ) . Crossref, Web of Science, Google Scholar
- Journal of Money, Credit and Banking 36 , 851 ( 2003 ) . Crossref, Web of Science, Google Scholar
- International Finance 13 , 79 ( 2010 ) . Crossref, Web of Science, Google Scholar
- Chinn, M and H Ito (2007). Notes on the calculation of the Chinn–Ito financial openness variable. Working Paper . Google Scholar
- Journal of Comparative Policy Analysis 22 , 302 ( 2008 ) . Google Scholar
- Japan and the World Economy 22 , 107 ( 2010 ) . Crossref, Web of Science, Google Scholar
- Courdacier, N and P Martin (2006). The geography of asset trade and the euro: Insiders and outsiders. ESSEC Working Paper, DR 0602 . Google Scholar
- Journal of Political Economy 109 , 811 ( 2001 ) . Crossref, Web of Science, Google Scholar
- Journal of International Economics 74 , 94 ( 2008 ) . Crossref, Web of Science, Google Scholar
- , Global Imbalances, Financial Liberalization, and Exchange Rate Policy, NBER EAST ASIA Seminar on Economics, eds.
T. Ito and A. Rose (The University of Chicago Press, Chicago, 2008) pp. 267–315. Google Scholar - , A New Financial Market Structure for East Asia, eds.
Y. Park , T. Ito and Y. Wang (Edward Elgar, Northhampton, 2005) pp. 84–104. Google Scholar - Faruqee, H, S Li and IK Yan (2004). The determinants of international portfolio holdings and home bias. IMF Working Paper WP/04/34, Washington, DC: International Monetary Fund . Google Scholar
- , Capital Flows and the Emerging Economies, ed.
S. Edward (The University of Chicago Press, Chicago, 2000) pp. 137–158. Google Scholar - , Financial Crises in Emerging Markets , eds.
R. Glick , R. Moreno and M. Spiegel ( Cambridge University Press , New York , 2001 ) . Crossref, Google Scholar - Journal of International Money and Finance 24 , 387 ( 2005 ) . Crossref, Web of Science, Google Scholar
- Grilli, V and GM Milesi-Ferretti (1995). Economic effects and structural determinants of capital controls. IMF Staff Papers, 42, 517–551 . Google Scholar
- Journal of Finance 56 , 1959 ( 2001 ) . Crossref, Web of Science, Google Scholar
- Kim, S, J Lee and K Shin (2005). Regional and global financial integration in East Asia. Working Paper, Economics Department, Korea University . Google Scholar
- Journal of Finance 52 , 1131 ( 1997 ) . Crossref, Web of Science, Google Scholar
- Journal of Political Economy 106 , 1113 ( 1998 ) . Crossref, Web of Science, Google Scholar
- Lane, PR and GM Milesi-Ferretti (2003). International financial integration. IMF Staff Papers, 50, 82–113 . Google Scholar
- Lee, H and H Huh (2008). One-way and two-way financial asset holdings and their implications for financial cooperation in East Asia. Working Paper, Kangwon University . Google Scholar
- Journal of International Economics 64 , 335 ( 2004 ) . Crossref, Web of Science, Google Scholar
- Miniane, J (2004). A new set of measures on capital account restrictions. IMF Staff Papers, 51 . Google Scholar
- Mody, A, A Razin and E Sadka (2003). The role of information in driving FDI flows: Host-country transparency and source-country specialization. NBER Working Paper No. 9662, National Bureau of Economic Research, Inc . Google Scholar
- Journal of Development Economics 88 , 269 ( 2009 ) . Crossref, Web of Science, Google Scholar
- Park, D (2003). Internationalizing the Korean bond market. In A Study on the Construction of the Infrastructure for Bond and Money Markets in Korea, Korea Fixed Income Research Institute (in Korean) . Google Scholar
- Park, D, C Rhee and D Yang (2006). Population ageing and cross-border capital flows: Challenges and policy responses for the APEC economies. Paper presented at the APEC expert group meeting on population aging . Google Scholar
- Journal of International Economics 65 , 269 ( 2005 ) . Crossref, Web of Science, Google Scholar
- American Political Science Review 91 , 531 ( 1997 ) . Crossref, Web of Science, Google Scholar
- Review of Financial Studies 21 , 1403 ( 2008 ) . Crossref, Web of Science, Google Scholar
- Rose, A (2004). A meta-analysis of the effects of common currencies on international trade. NBER Working Paper No. 10373, National Bureau of Economic Research, Inc . Google Scholar
- Schindler, M (2009). Measuring financial integration: A new data set. IMF Staff Papers, 56, 222–238 . Google Scholar
- Takeuchi, A (2006). Identifying impediments to cross-border bond investment and issuance in Asian countries. BIS Papers 30 . Google Scholar
- Wei, S (2000). Local corruption and global capital flows. Brookings Papers on Economic Activity, 2, 303–346 . Google Scholar
- , Developing Government Bond Markets: A Handbook ( 2002 ) . Google Scholar
