Flight Capital as a Portfolio Choice

By Anke Hoeffler, Catherine A Pattillo, Paul Collier

December 1, 1999

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Format: Chicago

Anke Hoeffler, Catherine A Pattillo, and Paul Collier. Flight Capital as a Portfolio Choice, (USA: International Monetary Fund, 1999) accessed December 26, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper sets flight capital in the context of portfolio choice, focusing upon the proportion of private wealth that is held abroad. There are large regional differences in this proportion, ranging from 5 percent in South Asia to 40 percent in Africa. We explain cross-country differences in portfolio choice by variables that proxy differences in the risk-adjusted rate of return on capital. We apply the results to four policy questions: how the East Asian crisis affected domestic capital outflows; herd effects; the effect of the IMF-World Bank debt relief initiative for heavily-indebted poor countries (HIPC) on capital repatriation; and why so much of Africa’s private wealth is held outside the continent.

Subject: Balance of payments, Capital outflows, External debt, External position, Financial institutions, Foreign assets, Foreign exchange, Real exchange rates, Stocks

Keywords: Africa, Capital flight, Capital flight literature, Capital flight share, Capital outflows, Cline capital flight measure, East Asia, Flight capital, Foreign assets, Increases in capital capital flight, Institutional investor, Middle East, Portfolio choice, Rate of return, Real exchange rates, Risk rating, South Asia, Stocks, Sub-Saharan Africa, WP

Publication Details

Pages:

33
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1999/171
Stock No:

WPIEA1711999
ISBN:

9781451858488
ISSN:

1018-5941

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