Capital Market Liberalization and Development
Capital Market Liberalization and Development
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Abstract
In the 1980s and 1990s, many countries opened their capital accounts and liberalized their domestic financial markets as part of the wave of liberalization that characterized the period. In 1997 the IMF even proposed changing its charter to include a mandate to promote capital market liberalization. At the time, many other economists warned that open capital accounts would lead to volatility and increased risk without contributing to growth or stability. Yet there was virtually no body of material or survey of literature that could provide the background for the debate on this issue. This book — which brings together some of the leading researchers and practitioners from around the world — attempts to fill that gap and goes a step further by providing alternative policy options to enhance macroeconomic management. The first chapter addresses the effects of capital market liberalization on developing countries in the presence of market failures and proposes policy interventions that allow developing countries to manage the risks associated with the volatility of capital flows. The rest of the book is organized around three major themes. The first part examines in detail the effects of capital market liberalization on developing countries. The second part analyses experiences with different types of capital account management — price-based and quantity-based regulations as well as other interventions in financial markets. The third part considers different forms of national and global financial regulations that may be used to manage the risks that capital flows generate on domestic financial systems.
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Front Matter
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1 Capital Market Liberalization and Development
José Antonio Ocampo and others
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2 The Benefits and Risks of Financial Globalization
Sergio L. Schmukler
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3 Capital Market Liberalization, Globalization, and the IMF
Joseph E. Stiglitz
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4 From the Boom in Capital Inflows to Financial Traps
Roberto Frenkel
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5 Capital Market Liberalization and Poverty
Andrew Charlton
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6 Capital Management Techniques in Developing Countries: Managing Capital Flows in Malaysia, India, and China
Gerald Epstein and others
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7 The Role of Preventative Capital Account Regulations
José Antonio Ocampo andJosé Gabriel Palma
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8 The Malaysian Experience in Financial‐Economic Crisis Management: An Alternative to the IMF‐Style Approach
Martin Khor
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9 Domestic Financial Regulations in Developing Countries: Can They Effectively Limit the Impact of Capital Account Volatility?
Liliana Rojas‐Suarez
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10 The Pro‐Cyclical Impact of Basel II on Emerging Markets and its Political Economy
Stephany Griffith‐Jones andAvinash Persaud
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11 Consequences of Liberalizing Derivatives Markets
Randall Dodd
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12 Do Global Standards and Codes Prevent Financial Crises?
Benu Schneider
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End Matter
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