Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/313425 
Authors: 
Year of Publication: 
2019
Citation: 
[Journal:] Journal of Banking and Financial Economics (JBFE) [ISSN:] 2353-6845 [Issue:] 11 [Year:] 2019 [Pages:] 19-45
Publisher: 
University of Warsaw, Faculty of Management, Warsaw
Abstract: 
This paper investigates to what extent low-income developing countries (LIDCs) characterized as frontier markets (FMs) have begun to be subject to capital flows dynamics typically associated with emerging markets (EMs). Using a sample of developing countries covering the period 2000-14, we show that: (i) average annual portfolio flows to FMs as a share of gross domestic product (GDP) outstripped those to EMs by about 0.6 percentage points of GDP; (ii) during years of heightened stress in global financial markets, portfolio flows to FMs dried up like those to EMs; and that (iii) FMs have become more integrated into international financial markets. Our findings confirm that, in terms of portfolio flows, FMs have become more similar to EMs than to the rest of LIDCs and are therefore more vulnerable to swings in global financial markets conditions. Accordingly, it is important to have in place frameworks to strengthen FMs' resilience to adverse capital flows shocks.
Subjects: 
Frontier Markets
Portfolio flows
Financial Integration
Balance of Payments Needs
JEL: 
E44
F3
G0
O57
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Article

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