Capital account openness and financial instability

Author: Zhang Liqing
Publisher:
Publish Date: 2004-04-04
Features: Capital account liberalization is a hot topic in the current international financial field and an important aspect of China's opening-up after joining the WTO. The author applies the theory of "non-financial productive factors" and creatively proposes an analytical framework for the appropriate level of foreign capital inflow, explaining the tendency of excessive capital inflow during the process of capital account liberalization and its underlying causes. Combining the experiences of developing countries since the 1970s, the study empirically examines the correlation between capital account liberalization and financial instability, clarifying the adverse effects of excessive capital inflow on macroeconomic and financial sector stability. After conducting a comparative analysis of various strategies for capital account liberalization, the book provides a detailed discussion on the prerequisites, sequence, and related policy arrangements under the "gradual approach." It comprehensively reviews the current state of China's capital controls and conducts an in-depth study of China's model and near-term strategies for capital account liberalization. The author is one of the earliest scholars in China to research capital account liberalization, having published numerous papers and works on the subject. This book represents his latest research, containing many innovative insights and holding significant academic value and policy reference significance.