Prasad, Rogoff, Wei, and Kose, IMF, 2003

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• ????
• ?????, ??????????
• ?????, ??????????.
• ????
• Prasad, Rogoff, Wei, and Kose, IMF, 2003
• Kose, Prasad, Rogoff, and Wei, 2005 (JEL?)

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Turkey
India
U.S.A.
China
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Benefits of Financial Integration Theory

• Direct Channels
• Efficient international allocation of capital
• For capital-poor economieslower cost of capital,
  higher investment
• Spillovers of technological and managerial
  expertise

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Benefits of Financial Integration Theory

• Indirect Channels
• Domestic financial sector development
• Specialization
• Disciplining device for macro policies

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Benefits of Financial Integration Theory

• Effects on Volatility
• No strong implication for output volatility
• Consumption smoothing via international risk
  sharing
• gt Lower consumption volatility

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Growth Benefits of Financial Integration Evidence

• About 20 studies of growth effects
• No effect 4
• Mixed 12
• Positive 4

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• ???? (Threshold Effect)
• ?????, ??????????????
• ?????, ??????????????.
• ??
• ???, ??
• ???, ??
• ?? Wei, 2000 Alfaro, Kalemli-Ozcan and
  Volosovych, 2003
• Klein, 2005 Chinn and Ito, 2005.

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• ???? (Composition Effect)
• ?????????, ?????????
• ?????????, ?????????.
• ?? ?? vs. ???
• ?? Frankel and Rose Kose, Prasad, Rogoff, and
  Wei Frankel and Wei.

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The composition hypothesis

• Not all capital flows are equal
• FDI and maybe portfolio inflow are more
  beneficial to growth than debt
• Desoto and Reisen 2001 Bekaert, Harvey, and
  Lundblad, 2005, JFE
• FDI is also less volatile than international bank
  loans -gt More reliance on bank loans increases
  vulnerability to currency crashes
• Frankel and Rose, 1996 Frankel and Wei, 2005

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Volatility of (FDI/GDP) and (Loan/GDP)
(1980-2003, Measured by Standard Deviation)
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Volatility of (FDI/GDP) and (Loan/GDP)
(1980-2003, Measured by Coefficient of Variation)
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• ???? ?????
• ?????????????
• ???????????????
• ??? (2000, 2001) ?????? (2002)
• Corruption is linked to a composition of capital
  inflows away from FDI and towards bank loans.
• Feira and Mauro (2005)
• Higher institutional quality -gt higher share of
  equity-like capital flows in total foreign
  liabilities.

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• ????
• Albuqurque (2004 JIE) worse credit rating
  related to more (not less) FDI/total inflows.
• ????, ??????????

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• ????????????? ??????????????.
• ?????? ???????.

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• ????????????? ??????????????.
• ??? ? ??? (2005), Caballero, Farhi, and
  Gourinchas (2005)
• Low financial development Low K/L ratio
• -gt inward FDI capital outflow

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• ?????? ???????.
• ??
• IV for corruption
• IV for financial institution

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• ???????
• ???? initial mortality of European colonizers
• ???????, ???????
• ???????, ???????.
• ????? Acemoglu, Johnson Robinson
• ??
• ?? ? ??
• ??? ? ???

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• ?????????
• ??????? (legal origin)
• ????????????????????
• ??common law, ????????
• ??civil law, ????????.
• ????? La Porta, De-silanes, Shleifer Vishny
• ??
• ?? ? ??
• ??? ? ???

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• ??
• Settler mortality and legal origin are not highly
  correlated.

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• ????
• ????, FDI ?????? (????????????).
  ?2000?????????????.
• ??????????????????? ?????????, FDI ???????.

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