Changing Times for Frontier Markets: A Perspective from Portfolio Investment Flows and Financial Integration

The influence of earnings management on bank efficiency: the case of frontier markets

“…Frontier markets are vulnerable to capital outflows that could jeopardise macroeconomic performance, an issue heightened following the 2008 Global Financial Crisis ((GFC) (Abidi et al, 2016). Despite this weakness, capital continues to flow to nations with better growth prospects and lower costs.…”

Opening Up: Capital Flows and Financial Sector Dynamics in Low-Income Developing Countries

“…In addition to FDI flows that have always played an important part in foreign financing, LIDCs have received a growing amount of portfolio and other flows. This change in the composition of capital inflows has important implications, because private non-FDI flows exhibit volatile and pro-cyclical dynamics similar to those experienced by EMEs (Abidi, Hacibedel, and Mwanza, 2016;Araujo and others, 2017b).…”

“…A broad empirical and theoretical literature shows how surges in capital flows can trigger boom-andbust cycles in recipient economies and lead to the build-up of financial vulnerabilities (Reinhart and Reinhart, 2008;Jordà, Schularick, and Taylor, 2011;Ghosh, Ostry, and Qureshi, 2016;Reinhart, Reinhart, and Trebesch, 2016;Korinek, 2018;Eberhardt and Presbitero, 2021). Non-FDI capital flows to LIDCs are generally pro-cyclical (Araujo and others, 2017a, b), and for the subgroup of frontier markets now closely resemble those to EMEs in terms of volatility and synchronicity with global factors (Abidi, Hacibedel, and Mwanza, 2016). As a consequence, the experiences of EMEs in managing capital flows are becoming increasingly relevant to LIDCs.…”