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Article
Publication date: 21 July 2020

Olawumi Fadeyi, Stanley McGreal, Michael McCord and Jim Berry

Office markets and particularly international financial centres over the past decade have experienced rapid financialisation, developments and indeed changes in the…

Abstract

Purpose

Office markets and particularly international financial centres over the past decade have experienced rapid financialisation, developments and indeed changes in the post-global financial crisis (GFC) landscape. Importantly, the volume and types of international capital flows have witnessed more foreign actors and vehicles entering into the investment landscape with the concentration of investment intensifying within key financial centres. This paper examines the interaction of international real estate capital flows in the London, New York and Tokyo office markets between 2007 and 2017.

Design/methodology/approach

Using Real Capital Analytics (RCA) data comprising over 5,700 office property transactions equating to $563bn between 2007 and 2017, the direct global capital flows into the London, New York and Tokyo office markets are assessed using an autoregressive distributed lag (ARDL) approach. Further, Granger causality tests are examined to analyse the short-run interaction of international real estate capital flows into these three major office markets.

Findings

By assessing the relativity of internal to external investments in these three central business district (CBD) office markets, differences in market dynamics are highlighted. The London office market is shown to be highly dependent on international flows and the USA, the foremost source of cross-border investment on the global stage. The cointegration and causality analysis indicate that cross-border real estate investment flows in these markets (and financial centres) show both long- and short-run relationships and suggest that the London office market remains more distinct and the most reliant on international capital flows with a wider geographical spread of investment activities and investor types. In the case of New York and Tokyo, these markets appear to be driven by more domestic investment activity and capital seemingly due to subtle factors pertaining to investor home bias, risk aversion and diversification strategies between the markets in the aftermath of the GFC.

Originality/value

Given the importance of the CBD offices in London, New York and Tokyo as an asset class for institutional investors, this paper provides some insights as to their level of connection and the interaction of the international capital flows into these three major cities.

Details

Journal of Property Investment & Finance, vol. 39 no. 4
Type: Research Article
ISSN: 1463-578X

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Article
Publication date: 26 October 2010

Graeme Newell, Alastair Adair and Stanley McGreal

The purpose of this paper is to assess the robustness of capital flows into European commercial property markets during the global financial crisis (GFC) – over 2007‐2008;…

Abstract

Purpose

The purpose of this paper is to assess the robustness of capital flows into European commercial property markets during the global financial crisis (GFC) – over 2007‐2008; particularly highlighting differences between the developed and developing European markets.

Design/methodology/approach

Using the Real Capital Analytics database of over 49,000 commercial property transactions valued at over $1.5 trillion in 2007‐2008, the robustness of capital flows into the European commercial property markets is assessed during the GFC. The impact of the GFC on capital flows is assessed in both a regional context and global context, as well as between the developed and developing markets in Europe.

Findings

This paper assesses the robustness of the capital flows into the commercial property markets in Europe over 2007‐2008. Clear differences emerge regarding the relative impact in Europe in a regional and global context, as well as between the developed and developing European markets. The results highlight the robustness, stature and significant relative contribution of capital flows into the European commercial property markets across a range of property investment characteristics during the GFC.

Practical implications

Given the importance of commercial property as an asset class for institutional investors, this paper assesses the robustness of capital flows into the commercial property markets in Europe. By embedding this in a regional and global context, the robustness, stature, relative impact and significant contribution by European commercial property markets in the uncertainty and volatility of the environment of the global financial crisis is articulated for global property investors. Clear differences between the developed and developing markets in Europe are identified.

Originality/value

Using over 49,000 commercial property transactions, this paper is the first attempt to rigorously and empirically assess the robustness of capital flows into global commercial property markets, with a specific focus on the European commercial property markets during this unique international event of the GFC. Given the significance of commercial property as an institutional asset class, this empirically validated research enables a more informed and critical understanding of the impact of the GFC on capital flows into the commercial property markets in Europe, as well as identifying global property investor considerations regarding the ongoing significance for capital flows in their commercial property investment strategies in Europe and globally.

Details

Journal of European Real Estate Research, vol. 3 no. 3
Type: Research Article
ISSN: 1753-9269

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Article
Publication date: 8 June 2012

Wei Li and Zhichao Zhang

The purpose of this paper is to explore in depth the impact and transmission mechanism of different international capital flows on domestic employment and wages in China…

Abstract

Purpose

The purpose of this paper is to explore in depth the impact and transmission mechanism of different international capital flows on domestic employment and wages in China within a systematic framework; also to reveal whether the empirical results can confirm the basic model inferences.

Design/methodology/approach

Using dynamic economic model and empirical experiment, this study designs and conducts the analysis within a systematic framework. The authors acquire the needed and credible empirical data.

Findings

The international capital inflows will increase the average wage level, and the international capital outflows will significantly reduce the level of domestic wages. The unofficially recorded capital flows would appear negatively related to the domestic wages. Due to the complexities of relevant elements, the impact of different international capital flows on domestic employment is of insignificance. It is noteworthy that the impact of international capital flows on the average wage changes of different provinces will tend to converge to a certain extent.

Practical implications

The results have reflected that the capital flows between the different provinces have no obvious frictions and barriers.

Originality/value

The paper explores in depth the impact and transmission mechanism of different international capital flows on domestic employment and wages within a systematic framework. The empirical analysis related to the China different provinces is an exploratory experiment.

Details

China Finance Review International, vol. 2 no. 3
Type: Research Article
ISSN: 2044-1398

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Article
Publication date: 4 February 2020

Cay Oertel, Jonas Willwersch and Marcelo Cajias

The purpose of this study is to introduce a new perspective on determinants of cross-border investments in commercial real estate, namely, the relative attractiveness of a…

Abstract

Purpose

The purpose of this study is to introduce a new perspective on determinants of cross-border investments in commercial real estate, namely, the relative attractiveness of a target market. So far, the literature has analyzed only absolute measures of investment attractiveness as determinants of cross-border investment flows.

Design/methodology/approach

The empirical study uses a classic ordinary least squares estimation for a European panel data set containing 28 cities in 18 countries, with quarterly observations from Q1/2008 to Q3/2018. After controlling for empirically proven explanatory covariates, the model is extended by the new relative measurement based on relative yields/cap rates and relative risk premia. Additionally, the study applies a generalized additive mixed model (GAMM) to investigate a potentially nonlinear relationship.

Findings

The study finds on average a ceteris paribus, statistically significant lagged influence of the proxy for relative attractiveness. Nonetheless, a differentiation is needed; relative risk premia are statistically significant, whereas relative yields are not. Moreover, the GAMM confirms a nonlinear relationship for relative risk premia and cross-border transaction volumes.

Practical implications

The results are of interest for both academia and market participants as a means of explaining cross-border capital flows. The existing knowledge on determinants is expanded by relative market attractiveness, as well as an awareness of nonlinear relationships. Both insights help to comprehend the underlying transaction dynamics in commercial real estate markets.

Originality/value

Whereas the existing body of literature focuses on absolute attractiveness to explain cross-border transaction activity, this study introduces relative attractiveness as an explanatory variable.

Details

Journal of European Real Estate Research , vol. 13 no. 1
Type: Research Article
ISSN: 1753-9269

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Article
Publication date: 13 March 2020

Biplab Kumar Guru and Inder Sekhar Yadav

This study empirically examines the effect of capital controls on the volume and composition of capital flows at aggregated as well as at disaggregated level by different…

Abstract

Purpose

This study empirically examines the effect of capital controls on the volume and composition of capital flows at aggregated as well as at disaggregated level by different asset classes such as debt, FDI, equity, and derivatives.

Design/methodology/approach

Several dynamic panel SYS-GMM models are employed on two sets of unique data on cross-border capital flows and capital control index along with control variables at aggregated and disaggregated level by different asset classes during 1995–2015 for a sample of 31 Asian economies.

Findings

Econometric findings suggest that higher capital controls effectively reduce gross capital flows. The reduction in gross capital flows is largely found to be on account of effectiveness of controls on equity flows. However, the impact of controls on overall debt and derivative flows is found to be insignificant. Further, it was found that an increase in direct capital controls disaggregated by inflow and outflow categories significantly reduced the inflow of debt and equity + FDI flows and outflow of equity + FDI and derivative flows. Finally, the study did not find any substitution effect (due to indirect controls) and net effect on capital flows.

Practical implications

Results of such empirical examination may enable governments in respective countries to pursue prudent and rational capital controls as a shield against capital flight and shock transmission.

Social implications

Preventing capital flight through effective controls has macroeconomic benefits such as maintaining stability in income, growth, interest rate, exchange rate, and employment levels for the society.

Originality/value

The primary contribution of the study is the analysis of effectiveness of capital controls disaggregated by different asset categories such as debt, equity, FDI, and derivatives using two unique recent data sets for a large sample of Asian economies.

Details

Journal of Economic Studies, vol. 47 no. 2
Type: Research Article
ISSN: 0144-3585

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Article
Publication date: 5 December 2016

Eric Osei-Assibey and Seth Obeng Adu

The purpose of this paper is to investigate the determinants of portfolio equity flows to the Sub-Saharan African (SSA) region over the period 1996-2010.

Abstract

Purpose

The purpose of this paper is to investigate the determinants of portfolio equity flows to the Sub-Saharan African (SSA) region over the period 1996-2010.

Design/methodology/approach

The study uses a sample of 14 SSA countries to estimate the baseline regression through employing the system generalized methods of moment dynamic panel estimation framework. To check the robustness of the estimation results, the study further analyses the data set using the random effects-generalized least squares (EGLS) estimator. The Random effects-generalized least squares estimator is also referred to a the Estimated Generalized least Squares (EGLS) estimator.

Findings

The paper finds a significant positive relationship between financial development and portfolio equity flows. Furthermore, while the study surprisingly finds trade openness to have a significant negative relationship, political stability is found to have a significant positive relationship with portfolio equity. To check for the robustness of these results, the authors further analyse the data set using the random EGLS estimator. The result of the EGLS estimator confirms that there is a robust positive relationship between financial development and portfolio equity flows to SSA. However, the results suggest that neither trade openness nor political stability is a robust determinant of portfolio equity flows to the sub-region.

Practical implications

Policy measures should aim at enhancing financial sector development, political stability and rule of law. A transparent judicial system that enhances rule of law and deepens democratic governance in countries in the sub-region is critical, but even more critical is deepening the financial sector, given the important role financial development plays in portfolio equity flows as suggested by the findings. A range of measures and appropriate policy responses are therefore needed for countries that have to manage macroeconomic and financial stability risks to deepen the financial sector.

Originality/value

Most studies on private capital flows to SSA have focussed on foreign direct investment flows with no or scanty evidence on the drivers of portfolio equity flows. This study fills this gap in the literature.

Details

African Journal of Economic and Management Studies, vol. 7 no. 4
Type: Research Article
ISSN: 2040-0705

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Article
Publication date: 1 April 2006

Ephraim Clark and Octave Jokung

Seeks to analyze the role of population and wealth in determining capital movements between countries.

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506

Abstract

Purpose

Seeks to analyze the role of population and wealth in determining capital movements between countries.

Design/methodology/approach

By applying the Clark‐Jokung 50 percent portfolio theorem, considers the specific case of a two country world where the cumulative conditional expected outcome on the asset in one country is greater than or equal to that in the other country.

Findings

Specifically, lower population and wealth ratios (poor/rich) increase net capital flows to the poor country.

Originality/value

So far most of the literature on cross‐border capital flows has generally neglected the role of population and underestimated the role of wealth. This study addresses the gaps left by these deficiencies.

Details

Studies in Economics and Finance, vol. 23 no. 1
Type: Research Article
ISSN: 1086-7376

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Article
Publication date: 3 October 2016

K.S. Reddy, En Xie and Yuanyuan Huang

Drawing attention to the significant number of unsuccessful (abandoned) cross-border merger and acquisition (M&A) transactions in recent years, the purpose of this paper…

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3163

Abstract

Purpose

Drawing attention to the significant number of unsuccessful (abandoned) cross-border merger and acquisition (M&A) transactions in recent years, the purpose of this paper is to analyze three litigated cross-border inbound acquisitions that associated with an emerging economy – India, such as Vodafone-Hutchison and Bharti Airtel-MTN deals in the telecommunications industry, and Vedanta-Cairn India deal in the oil and gas exploration industry. The study intends to explore how do institutional and political environments in the host country affect the completion likelihood of cross-border acquisition negotiations.

Design/methodology/approach

Nested within the interdisciplinary framework, the study adopts a legitimate method in qualitative research, that is, case study method, and performs a unit of analysis and cross-case analysis of sample cases.

Findings

The critical analysis suggests that government officials’ erratic nature and ruling political party intervention have detrimental effects on the success of Indian-hosted cross-border deals with higher bid value, listed target firm, cash payment, and stronger government control in the target industry. The findings emerge from the cross-case analysis of sample cases contribute to the Lucas paradox – why does not capital flow from rich to poor countries and interdisciplinary M&A literature on the completion likelihood of international takeovers.

Practical implications

The findings have several implications for multinational managers who typically involve in cross-border negotiations. The causes and consequences of sample cases would help develop economy firms who intend to invest in emerging economies. The study also offers some implications of M&A for telecommunications and extractive industries.

Originality/value

Although a huge amount of extant research investigates why M&A fail to create value to the shareholders during the public announcement and post-merger stages, there is a significant dearth of research on the causes and consequences of delayed or abandoned national and international deals. The paper fills this knowledge gap by discussing an in-depth cross-case analysis of Indian-hosted cross-border acquisitions.

Details

Journal of Organizational Change Management, vol. 29 no. 6
Type: Research Article
ISSN: 0953-4814

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Book part
Publication date: 27 September 2011

Gohar G. Stepanyan

Purpose – Examine the role of institutional investors in accelerating the development of capital markets and economies abroad, the determinants of their investment, both…

Abstract

Purpose – Examine the role of institutional investors in accelerating the development of capital markets and economies abroad, the determinants of their investment, both in the domestic and foreign markets, and their importance in promoting good corporate governance practices worldwide and facilitating increased financial integration.

Methodology/approach – Review and synthesize recent academic literature (1970–2011) on the process of international financial integration and the role of foreign institutional investors in the increasingly global financial markets.

Findings – Despite the concern that short-term flow of international capital can be destructive to the emerging and developing market economies, academic evidence on a destabilizing effect of foreign investment activity is limited. Institutional investors’ systematic preference for stocks of large, well-known, globally visible foreign firms can explain the presence of a home bias in international portfolio investment.

Research limitations – Given the breadth of the two literature streams, only representative studies (over 45 published works) are summarized.

Social implications – Regulators of emerging markets should first improve domestic institutions, governance, and macroeconomic fundamentals, and then deregulate domestic financial and capital markets to avoid economic and financial crises in the initial stages of liberalization reforms.

Originality/value of paper – A useful source of information for graduate students, academics, and practitioners on the importance of foreign institutional investors.

Details

Institutional Investors in Global Capital Markets
Type: Book
ISBN: 978-1-78052-243-2

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Article
Publication date: 11 November 2020

Ly Dai Hung and Hoan Nguyen Thi Thuy

The paper analyzes the pattern of international capital flows, accounting for the convergence on economic growth.

Abstract

Purpose

The paper analyzes the pattern of international capital flows, accounting for the convergence on economic growth.

Design/methodology/approach

The paper employs an empirical analysis combined with a theoretical model. The evidence is based on a cross-section regression over a sample of 172 economies. And the model is an open multi-country overlapping generation (OLG) economy.

Findings

The empirical evidence records that the pattern of international capital flows in the club of convergence can diverge from the pattern in the club of unconvergence. A higher productivity growth rate is associated with more net capital inflows in the club of convergence but less net capital inflows in the club of unconvergence. The theory shows that proximity to world technology frontier can explain the divergence of capital flows.

Research limitations/implications

The result can account for controversies between theories on the cross-border capital flows: allocation puzzle, up-hill capital flows and neoclassical growth model.

Originality/value

The paper combines both the empirical analysis with the theoretical model construction to account for the role of convergence of economic growth on determining the pattern of international capital flows.

Details

Journal of Economic Studies, vol. 48 no. 8
Type: Research Article
ISSN: 0144-3585

Keywords

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