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Capital liberalization and various financial markets: Evidence from Taiwan

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  • Wu, Manhwa
  • Huang, Paoyu
  • Ni, Yensen

Abstract

Several studies have shown that capital liberalization has varying effects on emerging and developing markets. Meanwhile, other studies have suggested that capital liberalization has different effects on various industries. However, only a few studies have investigated whether capital liberalization has varying effects on different financial markets, including stock, currency, real estate, and bond markets. In this study, we investigate whether various financial markets in a small-scale economy, such as Taiwan, have been affected by capital liberalization in 2003, which is rarely explored comprehensively in the existing literature. Results showed that capital inflows from foreign investment institutions positively affected such markets. Consequently, the share market in Taiwan boomed, domestic currency appreciated, the real estate market soared, and bond prices increased.

Suggested Citation

  • Wu, Manhwa & Huang, Paoyu & Ni, Yensen, 2017. "Capital liberalization and various financial markets: Evidence from Taiwan," The Quarterly Review of Economics and Finance, Elsevier, vol. 66(C), pages 265-274.
    • Handle: RePEc:eee:quaeco:v:66:y:2017:i:c:p:265-274
    DOI: 10.1016/j.qref.2017.03.001
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    More about this item

    Keywords

    Capital liberalization; Financial markets; Capital flows;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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