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What Causes Speculative Fund Inflow to China?

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  • Ying Sophie Huang

Abstract

The determinants of the massive overseas speculative fund inflow to China in recent years are investigated. Results indicate that appreciation of the Chinese currency is the primary underlying force for the influx of funds. Speculative funds aim to earn a short-term profit due to the relatively higher interest rate in China as opposed to that in the United States. On the other hand, housing and stock markets do not directly cause the inflow of speculative funds, even though the funds may appear to target investment in these markets.

Suggested Citation

  • Ying Sophie Huang, 2010. "What Causes Speculative Fund Inflow to China?," Chinese Economy, Taylor & Francis Journals, vol. 43(5), pages 50-61, January.
  • Handle: RePEc:mes:chinec:v:43:y:2010:i:5:p:50-61
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    Cited by:

    1. Tsai, I-Chun & Chiang, Ming-Chu & Tsai, Huey-Cherng & Liou, Chia-Ho, 2014. "Hot money effect or foreign exchange exposure? Investigation of the exchange rate exposures of Taiwanese industries," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 31(C), pages 75-96.
    2. Feng Guo & Ying Huang, 2010. "Hot Money and Business Cycle Volatility: Evidence from China," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 18(6), pages 73-89, November.

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