English, Article, Journal or magazine article edition: Negative Alchemy?: Corruption and Composition of Capital Flows Shang-Jin Wei

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Bookmark: http://trove.nla.gov.au/version/85768
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • Negative Alchemy?: Corruption and Composition of Capital Flows
Author
  • Shang-Jin Wei
Physical Description
  • preprint
Notes
  • Crony capitalism and self-fulfilling expectations by international creditors are often suggested as two rival explanations for currency crisis. This paper examines a possible linkage between the two that has so far not been explored: corruption may affect a country’s composition of capital inflows in a way that makes it more likely to experience a currency crisis that is triggered/​aided by international investors’ self-fulfilling expectations. Using data on bilateral foreign direct investment (FDI) and bilateral bank loans, this paper finds clear evidence that corrupt countries tend to have a particular composition of capital inflows that is relatively light in FDI. Earlier studies have indicated that a country that has such a capital inflow structure is more likely to run into a subsequent currency crisis (in part through self-fulfilling expectations of the international creditors). Thus, this paper has illustrated one particular channel through which crony capitalism can increase ... Deux facteurs concurrents sont souvent avancés pour expliquer les crises monétaires : le capitalisme « de favoritisme » et les anticipations auto-entretenues des prêteurs internationaux. Il y a pourtant entre ces deux facteurs une relation qui n’a pas encore été étudiée : la corruption, qui affecte les flux de capitaux se dirigeant vers un pays dans un sens qui les rend vulnérables aux crises, crises elles-mêmes alimentées par les anticipations auto-entretenues des investisseurs internationaux. Ce document exploite des données sur les investissements directs étrangers et les prêts bancaires bilatéraux. Il en ressort que dans les pays corrompus, la composition des flux de capitaux est particulièrement pauvre en investissements directs étrangers. Or des études antérieures ont mis en évidence que les pays ayant ce type de composition des flux de capitaux étaient plus sensibles au risque de crise monétaire (notamment via les anticipations auto-entretenues des prêteurs internationaux). Ce ...
  • corruption, crony capitalism, capital inflows, currency crisis
  • RePEc:oec:devaaa:165-en
Language
  • English
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