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Capital Market Inflation in Emerging Markets: the Cases of Brazil and South Korea

PSL Quarterly Review

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Title Capital Market Inflation in Emerging Markets: the Cases of Brazil and South Korea
 
Creator Bonizzi, Bruno; SOAS, University of London
 
Subject —
Finance; Asset price inflation; Foreign Investors
F65, F36, G12, O57
 
Description This paper investigates the dynamics of capital markets in emerging markets in a period of financial integration. It takes the case of Brazil and South Korea, two key emerging markets in the global economy, to assess the relationship between capital flows and equity prices. This is analysed through Jan Toporowski’s theory of “capital market inflation”, which explains the movements of equity prices in relation to the inflows of funds into the capital market. The main argument put forward is that foreign capital inflows into the emerging equity markets have substantially contributed to create the excess liquidity that gives rise to a process of capital market inflation. This contributes both to extend Toporowski’s theory to the context of emerging financially open countries, and to give a new perspective to the debates over financial globalisation by proposing the theory of capital market inflation as a framework to understand the impacts of capital flows to emerging markets. The empirical evidence available from Brazil and South Korea suggests that this is a consistent and instructive framework of analysis. Jel codes: F65, F36, G12, O57Keywords: Finance, Asset price inflation, Foreign investors
 
Publisher Economia civile
 
Contributor —
 
Date 2015-07-22
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
—
 
Format application/pdf
 
Identifier http://annalidibotanica.uniroma1.it/index.php/PSLQuarterlyReview/article/view/11989
 
Source PSL Quarterly Review; Vol 68, No 273 (2015)
PSL Quarterly Review; Vol 68, No 273 (2015)
2037-3643
ISSN 2037-3635
 
Language eng
 
Relation http://annalidibotanica.uniroma1.it/index.php/PSLQuarterlyReview/article/view/11989/12973
 
Rights Copyright (c) 2016 Bruno Bonizzi
http://creativecommons.org/licenses/by-nc-nd/4.0