Emerging Markets and Financial Volatility-Beyond Mexico

[摘要] In the wake of the Mexican financialcrisis, too much attention has been given to what washappening in emerging economies and too little to what waschanging in financial markets.What are these changes?First, much of the capital flow to emerging markets is nowin the form of bonds and portfolio equity investment.Second, investors managing these flows are attracted tohigh-risk, high-return opportunities and are less patientthan the foreign direct investors or banks that emergingmarket governments may have been more used to dealing with.Third, these investors have no way of communicating theirpatience level to policymakers other than by exiting.Andfourth, high information costs tend to concentrate theseflows in "hot" countries and lead investors torely on a few knowledgeable observers to signal when theirreturns are at risk, adding to the potential volatility.This Note attempts to explain the origins of volatility, howvolatility affects emerging market investors, and theeconomic management implications behind the changes.In thewake of volatile global capital flows, the World Bank toomust reconsider its role in its assistance to client countries.

[发布机构] World Bank, Washington, DC

[学科分类] 社会科学、人文和艺术（综合）

[关键词] CAPITAL MARKETS;ECONOMIC CRISIS;CAPITAL MOVEMENTS;INFORMATION;INTERNATIONAL INVESTMENTS