Global Liquidity and Financial Flows to Developing Countries: New trends in emerging markets and their implications C.P. Chandrasekhar

This paper argues that supply-side factors rather than the financing requirements of developing countries, explain the recent revival and surge in capital flows into developing countries. Financial liberalization and the globalization of finance have also resulted in changes in the financial structure. This in turn has implications for the accumulation of risk in markets where agents tend to herd. Associated with this increasing risk are changes in the business practices and motivations of financial firms that reduce the role of finance in ensuring broad-based economic growth.

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