Malaysian Capital Controls: Macroeconomics and Institutions

By Natalia T. Tamirisa, Simon Johnson, Kalpana Kochhar, Todd Mitton

February 1, 2006

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Natalia T. Tamirisa, Simon Johnson, Kalpana Kochhar, and Todd Mitton. Malaysian Capital Controls: Macroeconomics and Institutions, (USA: International Monetary Fund, 2006) accessed October 8, 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

We analyze the capital controls imposed in Malaysia in September 1998. In macroeconomic terms, these controls neither yielded major benefits nor were costly. At the same time, the stock market interpreted the capital controls (and associated events) as favoring firms with stronger political connections, and some connected firms reportedly received advantages immediately following the crisis. Analysis of financial accounts indicates that connected firms outperformed unconnected firms before the 1997-98 crisis but not afterward. After the crisis, connected firms were either not supported as much as the market had expected or the benefits they received were not manifest in their published accounts.

Subject: Banking, Capital controls, Currencies, Financial crises, Foreign exchange transactions

Keywords: Capital control, PMC firm, Stockbroking company, Unconnected firm, WP

Publication Details

Pages:

51
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2006/051
Stock No:

WPIEA2006051
ISBN:

9781451863116
ISSN:

1018-5941

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