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Thailand Capital Flight through Trade with the US During Times of Political and Economic Instability

Author

Listed:
  • Pornchai Chunhachinda

    (Faculty of Commerce and Accountancy, Thammasat University, 2 Prachan Road, Bangkok 10200, Thailand)

  • Maria E. de Boyrie

    (New Mexico State University, PO Box 30001/Department of MSC 3FIN, Las Cruces, NM 88003-8001, USA)

  • Simon J. Pak

    (Penn State University, Great Valley School of Graduate Professional Studies, 30 East Swedesford Road, Malvern, PA 19355, USA)

Abstract

This paper investigates capital flight from Thailand to the US through trade misinvoicing during the period from 1990 to 2005. The evidence indicates that capital flight from Thailand to the US, valued over US$16,189 million, had been done through under-invoicing exports to the US rather than over-invoicing imports from the US. The major incentive for the movement of capital is investment, followed by political events in Thailand, and the most significant determinants of capital flight are the US T-bill rate, the deposit rate in Thailand, and the degree of overvaluation of the Thai Baht. Interestingly, the 1997 Asian economic crisis did not play a significant role in the capital movement through trade.

Suggested Citation

  • Pornchai Chunhachinda & Maria E. de Boyrie & Simon J. Pak, 2008. "Thailand Capital Flight through Trade with the US During Times of Political and Economic Instability," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 11(03), pages 363-387.
    • Handle: RePEc:wsi:rpbfmp:v:11:y:2008:i:03:n:s0219091508001404
    DOI: 10.1142/S0219091508001404
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    References listed on IDEAS

    as
    1. Prakash Loungani & Paolo Mauro, 2001. "Capital Flight from Russia," The World Economy, Wiley Blackwell, vol. 24(5), pages 689-706, May.
    2. World Bank, 1985. "World Development Report 1985," World Bank Publications - Books, The World Bank Group, number 5968.
    3. Cuddington, John T., 1987. "Capital flight ," European Economic Review, Elsevier, vol. 31(1-2), pages 382-388.
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    Cited by:

    1. Rui Fan & Oleksandr Talavera & Vu Tran, 2020. "Social media, political uncertainty, and stock markets," Review of Quantitative Finance and Accounting, Springer, vol. 55(3), pages 1137-1153, October.

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    More about this item

    Keywords

    Capital flight; trade misinvoicing; political; economic instability;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G2 - Financial Economics - - Financial Institutions and Services
    • G3 - Financial Economics - - Corporate Finance and Governance

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