TY - JOUR
T1 - Financial flows, global interest rates, and political integration
AU - Nagayasu, Jun
N1 - Publisher Copyright:
© 2018 Elsevier Inc.
Copyright:
Copyright 2019 Elsevier B.V., All rights reserved.
PY - 2019/12
Y1 - 2019/12
N2 - This paper empirically analyzes international financial flows using data from 2000 to 2016. Using a factor model to calculate a proxy for global interest rates, we confirm that national real interest rates include global elements, particularly those of advanced countries. Thus, interest rate differentials have no significant influence on the financial flows of advanced countries. On the other hand, we find that exchange rates and political integration more consistently influence investment decisions on forming financial portfolios than interest rates.
AB - This paper empirically analyzes international financial flows using data from 2000 to 2016. Using a factor model to calculate a proxy for global interest rates, we confirm that national real interest rates include global elements, particularly those of advanced countries. Thus, interest rate differentials have no significant influence on the financial flows of advanced countries. On the other hand, we find that exchange rates and political integration more consistently influence investment decisions on forming financial portfolios than interest rates.
KW - Financial flows
KW - Global interest rate
KW - Uncovered interest rate parity
UR - http://www.scopus.com/inward/record.url?scp=85057447032&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=85057447032&partnerID=8YFLogxK
U2 - 10.1016/j.frl.2018.11.021
DO - 10.1016/j.frl.2018.11.021
M3 - Article
AN - SCOPUS:85057447032
VL - 31
SP - 313
EP - 320
JO - Finance Research Letters
JF - Finance Research Letters
SN - 1544-6123
ER -