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The Evidence and Impact of Financial Globalization
- 1st Edition - November 27, 2012
- Editor: Gerard Caprio
- Language: English
- Hardback ISBN:9 7 8 - 0 - 1 2 - 3 9 7 8 7 4 - 5
- eBook ISBN:9 7 8 - 0 - 1 2 - 4 0 5 8 9 9 - 6
The sharp realities of financial globalization become clear during crises, when winners and losers emerge. Crises usher in short- and long-term changes to the status quo, and ev… Read more
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Request a sales quoteThe sharp realities of financial globalization become clear during crises, when winners and losers emerge. Crises usher in short- and long-term changes to the status quo, and everyone agrees that learning from crises is a top priority. The Evidence and Impact of Financial Globalization devotes separate articles to specific crises, the conditions that cause them, and the longstanding arrangements devised to address them. While other books and journal articles treat these subjects in isolation, this volume presents a wide-ranging, consistent, yet varied specificity. Substantial, authoritative, and useful, these articles provide material unavailable elsewhere.
- Substantial articles by top scholars sets this volume apart from other information sources
- Rapidly developing subjects will interest readers well into the future
- Reader demand and lack of competitors underline the high value of these reference works
Undergraduates and graduate students worldwide working in all areas of finance and economics. Researchers will typically be examining the global aspects and implications of their particular interests
Volume 3
Section Editors
Preface
Contributors
Chapter 1. Financial Globalization and Crises: Overview
Introduction
Evidence on Financial Globalization
Forces Behind Globalization
Effects of Financial Globalization
Monetary and Exchange Rate Policy under Financial Globalization
Crises
Final Words
Acknowledgment
References
I: Evidence on Financial Globalization
Chapter 2. Measurements of Capital and Financial Current Account Openness
Measuring Financial Integration
Coding
Data Properties
Uses of Measures
Conclusions
Acknowledgments
References
Chapter 3. Measurement and Impact of Equity Market Liberalization
Introduction
Equity Market Liberalization
Effects of Stock Market Liberalization
Conclusion
Acknowledgments
References
Further Reading
Chapter 4. Bilateral Financial Links
Introduction
Bilateral Data on External Assets and Liabilities
What Explains Bilateral External Financial Linkages?
Stylized Facts
Cross-Border Financial Links and International Transmission of Shocks
Conclusions
See also
Glossary
Supplementary Materials
Further Reading
Relevant Websites
Chapter 5. Global Imbalances
The Contested Landscape of Global Imbalances
Global Imbalances Defined
Spendthrift America and the Saving–Investment Approach
A US Productivity Surge and the Intertemporal Approach
East Asian Mercantilism and Bretton Woods II Versus Self-Protection
A Global Saving Glut?
Imbalances and the Financial Crisis
See also
Acknowledgments
Glossary
References
Chapter 6. Aid Flows
Introduction
Situating Aid Flows Within Financial Globalization
The Particularities of Aid Flows
Aid Effectiveness and the NAA
Interaction of Aid Flows with the Larger Global Financial Architecture
Appendix
See also
References
II: Forces Behind Globalization
Chapter 7. Composition of International Capital Flows: A Survey
What the Chapter Is About
Introduction
Home-Court Information Advantage
Debt Flows
Equity Flows and Liquidity Shocks
Moral Hazard in Debt Contracts Under Limited Enforcement
Role of Bonds in the Presence of Home Bias in Goods and Equities
Conclusion
Acknowledgment
Glossary
References
Chapter 8. Migrant Remittances and Development
Introduction
Remittances Reduce Poverty
Remittances Improve Health and Education Outcomes of Recipient Households
Remittances can Provide Funds for Small Business Investments and Entrepreneurial Activities
Remittances Tend to Remain Stable and are Often Countercyclical to Crises and Natural Disasters
Remittances can have Some Downsides
Remittances can have a Positive Impact on Economic Growth and Development in the Presence of Supportive Institutions
Remittances can Improve Access to Capital Markets
Cost of Sending Remittances has Declined Steadily, but Remains High in Some Corridors
Post Offices, Savings Cooperatives, and Mobile Money Transfers can Play an Important Role in Reaching the Poorest
Remittances Data Need to be Improved
The International Remittances Agenda
References
Chapter 9. International Mutual Funds, Capital Flow Volatility, and Contagion – A Survey
Introduction
Portfolio Choice, Fund Managers’ Incentives, and Consequences for Capital Flows
Transparency, Informational Asymmetries, Asset Allocation, and Capital Flow Volatility
Conclusions
Acknowledgments
Glossary
References
Chapter 10. Capital Raisings
Introduction
Developed World: Patterns and Effects of Cross-Border Capital Raisings
Emerging Markets
Capital Raisings During the 2007–09 Global Financial Crisis
Conclusion
See also
Glossary
References
Chapter 11. International Cross-listings
Introduction
Some New (and Old) Wisdom on International Cross-listings
The Current State of the World Market for International Cross-listings
Price Discovery, Multi-market Trading, and Arbitrage
The Dynamics of Multi-market Trading
Concluding Remarks
Acknowledgments
References
Chapter 12. Disclosure of Ownership and Public Companies
Introduction
The Enron and Parmalat Examples
Disclosure of Beneficial Ownership
Related Party Transactions
Disclosure of Beneficial Ownership of Corporate Vehicles
Conclusion
References
Chapter 13. Role of Trade Finance
Introduction
What is Trade Finance?
Risks Inherent in International Trade
Existing Evidence on Trade Finance Patterns Around the World
New Evidence on Trade Finance Patterns Around the World
Theories of Trade Credit and Trade Finance
Relationship Between Bank Credit and Trade Credit
Trade Credit Versus Bank Credit during the Financial Crisis
Trade Finance Behavior during the Most Recent Global Financial Crisis
Role for Policy Interventions to Support Trade Finance During the Crises
Conclusion
Glossary
References
Chapter 14. Foreign Bank Participation in Developing Countries
Introduction
Foreign Bank Participation in Developing Countries: Trends and Regional Patterns
The Drivers of Foreign Bank Entry
The Consequences of Foreign Bank Entry
Conclusions
Acknowledgments
Glossary
References
Chapter 15. Opportunistic Foreign Currency Debt Issuance
Introduction and Overview
Related Literature
Long-Term IRP
Opportunistic FC Debt Issuance
Conclusion
See also
Glossary
References
Chapter 16. International Government Debt
Introduction
Trends
The Theory of International Government Debt
Evidence on International Borrowing and Default
Debt Structure and Debt Crises
Conclusions
See also
Acknowledgment
Glossary
References
Chapter 17. Carry Trade
Introduction
Designing Carry Trade Strategies
A Trading Laboratory for the Carry Trade
The Trader’s Decision Problem
Adjusting for Returns: KS*, AUC*, and Gain–Loss Ratio
Are Carry Trade Returns Compensation for Risk?
Conclusion
Glossary
Further Reading
III: Effects of Financial Globalization
Chapter 18. Capital Market Integration
The Empirics of Financial Globalization and Growth
Statistical Tests for Crisis Impacts of Openness
Studies of Historical Crisis Incidence and Costs
Calibrating Ranges for Costs of Openness-induced Crises
Evidence from the Global Crisis of 2007–09
Conclusion
See also
Glossary
References
Chapter 19. Collateral Benefits of Financial Globalization
Introduction
What Are the Theoretical Arguments for Collateral Benefits?
What Does the Empirical Evidence Say?
Does Financial Integration Enhance Productivity Growth?
Conclusion
Acknowledgments
References
Chapter 20. Foreign Direct Investment and Growth
Introduction
Overview of the Recent Empirical Literature
Complementarities
Channels, Mechanisms, and Linkages
Concluding Comments
See also
Glossary
References
Chapter 21. International Technology Transfer and Foreign Direct Investment
Introduction
Why should we Expect FDI to be a Source of Knowledge Transfer Across International Borders?
Evidence on Knowledge Transfer to Foreign Affiliates
Knowledge Externalities
Conclusions and Policy Implications
Glossary
References
Chapter 22. Role of Multinational Corporations in Financial Globalization
Introduction
What Are the Determinants of FDI?
Are There Any Growth Effects of FDI?
Foreign Investment, Volatility, and Crises
Conclusion
References
Chapter 23. India’s Reintegration into the World Economy in the 1990s
From Autarky to Reintegration
Empirical Facts About Reintegration
Foreign Portfolio Investment in the Equity Market
The Role of FDI
Foreign Borrowing
Effectiveness of Capital Controls and the Exchange Rate Regime
Domestic Finance and International Finance
Policy Questions About Capital Controls and Monetary Policy
Glossary
Further Reading
Relevant Websites
Chapter 24. Reforms of China’s Banking System
Challenges and Opportunities for China’s Growing Economy and Developing Financial System
The Dominant Role of Banks in the Financial Sector
Further Reading
Chapter 25. Policy Issues of China’s Financial Globalization
China’s Capital Markets Grow in Both Importance and Scope
Monetary and Foreign Exchange Policy
Future Developments in China
See also
Glossary
Further Reading
Chapter 26. Financial Integration in Europe
Financial Integration and Financial Development
How Integrated are European Financial Markets?
Prospects for Security Market Integration
Prospects for Credit Market Integration
Concluding Remarks
See also
Glossary
References
IV: Monetary and Exchange Rate Policy Under Financial Globalization
Chapter 27. The Impossible Trinity (aka The Policy Trilemma)
The Trilemma and Mundell–Fleming’s Framework
The Trilemma Choices of Countries – Trends and Trade-offs
Testing the Trilemma
Beyond the Trilemma Triangle: International Reserves and the Impossible Trinity
The Trilemma and the Future Financial Architecture
See also
Glossary
References
Chapter 28. Financial Globalization and Monetary Policy
Introduction
Globalization and Long-Term Interest Rates
Exchange Rate Regimes and Short-Term Interest Rates
The Financial Crisis, Liquidity, and the Credit Channel
Conclusion
Acknowledgment
See also
Glossary
References
Chapter 29. Interest Rate Parity
Introduction and Overview
Origins and Theory of IRP
Limits to Arbitrage and Factors Associated with Parity Deviations
Empirical Evidence on IRP from the Last 50 years
Empirical Evidence on IRP During the Global Financial Crisis
Conclusion and Cautionary Notes on Parity Deviations
Appendix
References
Chapter 30. Exchange Rate Regimes
Introduction
Exchange Rate Regimes
Why do we Care about ERR?
Exchange Rate Policies in the Post-Bretton Woods Era
Taking Stock
References
Chapter 31. Currency Unions
Introduction
The Benefits
The Costs
Concluding Remarks
Acknowledgment
Glossary
References
Chapter 32. Financial Dollarization
Introduction
Background
Determinants
Empirical Evidence
Costs and Risks
The Policy Agenda
Conclusion
Acknowledgment
See also
Appendix
Glossary
References
V: Crises
Chapter 33. Models of Currency Crises
Introduction
Causes of Currency Crises
Association with Other Crises
Incidence of Currency Crises
Predicting Currency Crises
Effects of Currency Crises
See also
Glossary
References
Relevant Websites
Chapter 34. Predictive Indicators of Financial Crises
Survey of Early Warning Models
Early Warning Models by Investment Banks
IMF Work on Early Warning Systems
Conclusion
See also
References
Chapter 35. A Perspective on Predicting Currency Crises
Introduction
Literature Survey
A Model of Currency Crises
Data Generation
Estimating Crisis Probabilities
Accuracy of the Estimated Probabilities
Conclusion
Appendix: Data Used
References
Chapter 36. Empirical Literature on Financial Crises: Fundamentals vs. Panic
Introduction
Empirical Evidence on the Role of Fundamentals
What do we Learn from the Evidence about the Role of Panic?
How can we Test for Panic?
Conclusion
See also
Acknowledgments
Glossary
References
Chapter 37. Sudden Stops in Capital Flows
Introduction
Empirical Definition of a Sudden Stop and Evidence on the Costs of Sudden Stops
Costs of Sudden Stops
Determinants of Sudden Stops
Ex-ante Policies and Policy Responses to Sudden Stops
Conclusion
See also
Glossary
References
Chapter 38. Definitions and Types of Financial Contagion
Introduction
Definitions of Contagion
The Channels for Shock Transmission
The Empirical Literature on Contagion
Recent Examples of Contagion
See also
Further Reading
Chapter 39. Cross-Border Banking: Regulation, Supervision, and Crisis Resolution
Introduction
Significance of Cross-Border Banking
Importance of Incentive-Compatible Supervisory and Resolution Structures
Illiquid and Insolvent Banks
Prudential Supervision
Conclusion
Glossary
Further Reading
Chapter 40. Market-Based Approach to Financial Architecture
Introduction
Postwar Background
Toward Financial Globalization 1971–80s
Financial Globalization and ‘Governance Light’ 1990–2007
Back to the Future of Instability and Crisis
See also
References
Chapter 41. Housing Is the Business Cycle
Introduction to the Revision
Introduction
The 3–3 Rule of US Real GDP
Temporal Orderings of Components of GDP
Multivariate Confirmation: It is a Consumer Cycle, not a Business Cycle
Hormones and Housing: It has been a Volume Cycle, not a Price Cycle
New Homes Nationwide have a Volume Cycle, not a Price Cycle, too
This Time was Different
The Phases of the Housing Financial Cycle: Hope, Hype, and Havoc
The Conflicts between Housing and Inflation Targeting
By the Way
Conclusion
Appendices
References
Chapter 42. US Stock Market Crisis of 1987
Introduction
Background
Timeline of the Crash
Factors That Contributed to the Severity of the Crash
Response of the Federal Reserve
Conclusion
See also
Glossary
Further Reading
Chapter 43. Mexican Financial Crisis of 1994–1995
Origins of the Crisis
The Consequences of Financial Liberalization
The System under Stress in 1994
Consequences of the 1994 Crisis
What did Mexico Gain in the Long Term?
Glossary
References
Further Reading
Chapter 44. East-Asian Crisis of 1997
Introduction
Origins of the Crisis
Dimensions of Vulnerability and Their Causes
Onset of the Crisis and the Role of Contagion
Why Was the Crisis So Protracted?
Conclusions
References
Chapter 45. Financial Globalization and the Russian Crisis of 1998
Introduction
Russia’s 3-year Road to the 1998 Crisis
Financial Globalization and Russia 1998
Lessons and Insights from Russia 1998
Concluding Remarks
See also
Acknowledgment
Glossary
References
Chapter 46. Argentina’s Default of 2001
Introduction
Economic Performance Under the Convertibility Plan, 1991–98
Economic Difficulties, 1998–2001
Economic and Political Background
The Default and Its Aftermath
See also
Glossary
References
Chapter 47. Assessment of Solutions to US Financial Crisis of 2008–09
Introduction
Measures Introduced between September 2008 and Mid-2009
Cross-Country Snapshot as of June 2009
Effect of Government Rescue Measures on Banks
What Happened After June 2009: A Brief Update
Glossary
Further Reading
Relevant Websites
Chapter 48. A Cross-Country Perspective on the Causes of the Global Financial Crisis
Introduction
Causes of the Crisis
The Evolution of the Crisis
Conclusions: Crisis Resolution Going Forward and the Path to Economic Recovery
See also
References
Chapter 49. Lessons and Policy Implications from the Global Financial Crisis
Introduction
Lessons for Macroeconomic Policy
Lessons for Redesigning Prudential Regulation and Supervision
Lessons for Reform of the International Financial Architecture
Conclusion
References
Index
- No. of pages: 800
- Language: English
- Edition: 1
- Published: November 27, 2012
- Imprint: Academic Press
- Hardback ISBN: 9780123978745
- eBook ISBN: 9780124058996
GC
Gerard Caprio
Gerard Caprio is William Brough Professor of Economics and Chair, Center for Development Economics at Williams College. He has served as the Head of Financial Sector Policy at The World Bank and Vice President and Head of Global Economics at J.P. Morgan.
Affiliations and expertise
Williams College,
Williamstown, MARead The Evidence and Impact of Financial Globalization on ScienceDirect