Negative Alchemy? : Corruption and Composition of Capital Flows

Shang-Jin Wei

Organisation for Economic Co-operation and Development

关键词: currency crisis;    capital inflows;    corruption;    crony capitalism;   

DOI  :  https://doi.org/10.1787/201684580375

学科分类：社会科学、人文和艺术（综合）

来源: OECD iLibrary

【 摘 要 】

Crony capitalism and self-fulfilling expectations by international creditors are often suggested as two rival explanations for currency crisis. This paper examines a possible linkage between the two that has so far not been explored: corruption may affect a country’s composition of capital inflows in a way that makes it more likely to experience a currency crisis that is triggered/aided by international investors’ self-fulfilling expectations. Using data on bilateral foreign direct investment (FDI) and bilateral bank loans, this paper finds clear evidence that corrupt countries tend to have a particular composition of capital inflows that is relatively light in FDI. Earlier studies have indicated that a country that has such a capital inflow structure is more likely to run into a subsequent currency crisis (in part through self-fulfilling expectations of the international creditors). Thus, this paper has illustrated one particular channel through which crony capitalism can increase ...