Foreign loans drive capital flight in emerging markets, impacting economic stability.
The study looked at what causes money to leave emerging market countries. They found that when money leaving is higher than average, it's mostly due to money coming in from other countries, not from savings within the country. Also, countries tend to borrow money from other countries to buy debts, rather than stocks, in the short term. This can lead to problems like high debt levels and sudden financial crises. Overall, the findings suggest that money leaving a country is not because people are taking their money out, but because they are borrowing money from other countries instead of using their own savings.