Portfolio Flows Into India: Do Domestic Fundamentals Matter?

Author/Editor:

Poonam Gupta ; James P. F. Gordon

Publication Date:

January 1, 2003

Electronic Access:

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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 analyzes the factors affecting portfolio equity flows into India using monthly data. Flows to India are small compared to other emerging markets, but seem to be relatively less volatile. They also seem to be quite resilient. The paper shows that portfolio flows are determined by both external and domestic factors. Among external factors, LIBOR and emerging market stock returns are important, while the primary domestic determinants are the lagged stock return and changes in credit ratings. In quantitative terms, both external and domestic factors are found to be about equally important.

Series:

Working Paper No. 2003/020

Subject:

Balance of payments Emerging and frontier financial markets Financial institutions Financial markets Financial services Interbank rates Portfolio investment Stock markets Stocks

English

Publication Date:

January 1, 2003

ISBN/ISSN:

9781451843866/1018-5941

Stock No:

WPIEA0202003

Pages:

37

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