Negative Alchemy? : Corruption and Composition of Capital Flows

[摘要] 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 ...

[发布日期] 2000-10-01 [发布机构] Organisation for Economic Co-operation and Development

[学科分类] 社会科学、人文和艺术（综合）

[关键词] currency crisis;capital inflows;corruption;crony capitalism