Push vs. Pull Factors of Capital Flows Revisited: A Cross-country Analysis

Tae Soo Kang () and Kyunghun Kim ()
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Tae Soo Kang: Korea Institute for International Economic, Postal: Building C, Sejong National Research Complex, 370, Sicheong-daero, Sejong-si,Korea, http://www.kiep.go.kr/index.do
Kyunghun Kim: Korea Institute for International Economic, Postal: Building C, Sejong National Research Complex, 370, Sicheong-daero, Sejong-si,Korea, http://www.kiep.go.kr/index.do

No 19-1, Working Papers from Korea Institute for International Economic Policy

Abstract: Capital market integration contributes to economic growth and it can be more beneficial for emerging market economies (EMEs, hereafter) at their early stages of development where the capital is relatively insufficient. An open capital market also enables investor to share the country-specific risks by holding foreign assets. However, there are also some negative side effects of capital market integration. Financial shocks originating in the center country can be quickly propagated through the integrated financial market. The Global Financial Crisis (GFC, hereafter) is a good example of the contagion of the financial crisis. Volatile cross-border capital inflows and outflows negatively affect financial stability, which eventually lowers economic growth by causing financial crises.

Keywords: capital flows; push factor; pull factor (search for similar items in EconPapers)
JEL-codes: F30 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2019-02-20
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Citations: View citations in EconPapers (6)

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