Browsing by Subject "Financial Development"

Since the 1990s, the international capital flow between countries has shown a sharp rise. Most of the transition economies such as Central and Eastern Europe (CEE) and the Commonwealth of Independent States (CIS) have adopted new measures to reform their financial systems, which not only brought important sources of overseas capital for their own economic development, but also guided their financial systems to develop in a more rational direction. However, such a model that relies heavily on the foreign capital has also brought serious financial hidden dangers. The declining trend of international capital flows after the financial crisis further confirms the existence of the "Lucas Paradox". Based on the sorting and research of previous literature, this dissertation takes CEE and CIS countries with unique background and status in transition economies as research objects. After summarizing the transition background and characteristics of these two types of transition economies, each aspect of financial development and transition is analyzed (banking, securities, financial regulation). Then, it analyzes the situation of international capital inflow in different stages in detail. In addition, the international capital flow data and financial development data of 19 transition economies from 1995 to 2019 were selected, and macro-control variables were considered. Meanwhile, this dissertation establishes a panel data model rely on FGLS estimation and systematic GMM method to discover the quantitative relationship between financial development and international capital flow. The empirical results show that with the improvement of the level of financial development, direct investment and international loans show a positive inflow, while indirect investment has a reverse outflow phenomenon. At the macroeconomic level, real economic growth rates and real interest rates affect total capital inflows, and the quality of national institutions affects direct and indirect investment inflows. In addition, increased financial development can significantly boost indirect investment and debt-based capital inflows in EU-acceded countries (CEE), but non-EU-acceded countries (CIS) are somewhat unattractive for international indirect investment.