Economics, Econometrics and Finance
4 years ago

Study Finds Foreign Direct Investment Offers Best Crisis Protection

RePEc: Research Papers in Economics
Do Some Forms of Financial Flows Help Protect From Sudden Stops
Paolo Mauro, Andrei A. Levchenko

Paper Summary

Related papers

Economics, Econometrics and Finance
8 years ago

Foreign debt hinders growth in developing countries, FDI and portfolio investment key

International Finance
1 view
Economics, Econometrics and Finance
4 years ago

Foreign investors favor large Indian firms with low promoter shareholding.

International Finance
Corporate Governance
Economics, Econometrics and Finance
4 years ago

Sound fiscal policies attract foreign investment to emerging markets.

International Finance

Some types of financial flows are more stable during economic crises than others. Foreign direct investment (FDI) is the least volatile form of financial flows, while portfolio equity and debt investments can be more unpredictable. During sudden stops in financial flows, FDI remains stable, portfolio equity has limited impact, portfolio debt may drop but recover quickly, and other flows like bank loans suffer severe drops and take longer to recover.