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on International Finance |
| By: | Filardo , Andrew J. (BOFIT); Siklos , Pierre L. (BOFIT) |
| Abstract: | This paper examines past evidence of prolonged periods of reserve accumulation in Asian emerging market economies and the direct and indirect implications for monetary stability through the potential impact of such episodes on financial stability. The empirical research focuses on identifying periods of prolonged interventions and correlations with key macrofinancial aggregates. Related changes in central bank balance sheets are also examined, especially in periods when the interventions are linked to strong capital inflows. In particular, we consider whether changes in the central bank's balance sheet from prolonged intervention lead to spillovers to the balance sheet of the private sector. We explore the possible forms of the spillovers and the consequences on asset prices (e.g., housing prices, equity prices, the growth in domestic credit). Policy implications are drawn. Finally, we propose a new indicator of reserves adequacy and excessive foreign exchange reserves accumulation based on a factor model. Two broad conclusions emerge from the stylized facts and the econometric evidence. First, the best protection against costly reserves accumulation is a more flexible exchange rate. Second, the necessity to accumulate reserves as a bulwark against goods price inflation is misplaced. Instead, there is a strong link between asset price movements and the likelihood of accumulating foreign exchange reserves that are costly. |
| Keywords: | foreign exchange reserves accumulation; monetary and financial stability |
| JEL: | D52 E44 F32 F41 |
| Date: | 2013–03–28 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bofitp:2013_005&r=ifn |
| By: | Didier, Tatiana; Schmukler, Sergio L. |
| Abstract: | This paper studies the extent to which firms in China and India use capital markets to obtain financing and grow. Using a unique data set on domestic and international capital raising activity and firm performance, it finds that the expansion of financial market activity since the 1990s has been more limited than what the aggregate figures suggest. Relatively few firms raise capital. Even fewer firms capture the bulk of the financing. Moreover, firms that issue equity or bonds are different and behave differently from other publicly listed firms. Among other things, they are typically larger and grow faster. The differences between users and non-users exist before the capital raising activity, are associated with the probability of raising capital, and become more accentuated afterward. The distribution of issuing firms shifts more over time than the distribution of those that do not issue, suggesting little convergence in firm size among listed firms. |
| Keywords: | Debt Markets,Microfinance,Economic Theory&Research,Access to Finance,Banks&Banking Reform |
| Date: | 2013–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6401&r=ifn |