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Political risk guarantees and capital flows: The role of bilateral investment treaties

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  • Mina, Wasseem

Abstract

This paper examines the influence of political risk guarantees of bilateral investment treaties on debt and equity flows using panel data on middle income countries for the period 1984-2011. Adopting system GMM methodology, the paper empirically finds that ratified bilateral investment treaties with OECD countries have a combined positive influence on non-guaranteed debt flows and a direct positive influence on portfolio equity flows. The results highlight the importance of considering political risk guarantees in financial integration, regulation of financial markets and institutions, and capital liberalization.

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  • Mina, Wasseem, 2015. "Political risk guarantees and capital flows: The role of bilateral investment treaties," Economics Discussion Papers 2015-24, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwedp:201524
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    Cited by:

    1. Eichler, Stefan & Nauerth, Jannik André, 2024. "Bilateral investment treaties and portfolio investment," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 91(C).
    2. Andrew Ojede & Ruby Kishan, 2017. "External Macroeconomic Imbalances And Foreign Direct Investment Inflows To Developing Countries," Contemporary Economic Policy, Western Economic Association International, vol. 35(3), pages 484-504, July.

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    More about this item

    Keywords

    political risk guarantees; bilateral investment treaties; capital flows; debt flows; equity flows;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • K33 - Law and Economics - - Other Substantive Areas of Law - - - International Law

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