, Volume 38, Issue 4, pp 579–605

Financial reforms and capital flows to emerging Europe


DOI: 10.1007/s10663-010-9150-3

Cite this article as:
Schmitz, M. Empirica (2011) 38: 579. doi:10.1007/s10663-010-9150-3


Analysis of 18 emerging European economies finds domestic financial reforms to be positively associated with net capital inflows. Controlling for standard determinants of capital flows, we find banking sector reforms in particular to be consistent with higher net financial inflows, whereas no such correlation is found for security market reforms or for indicators of financial depth. Additional net inflows are reaped by the EU accession countries. Countries with more reformed banking sectors receive significantly higher FDI and “other” investment net inflows; this is also found for gross financial inflows, but not for gross outflows.


Capital flows Financial reforms Financial development Foreign direct investment 

Copyright information

© Springer Science+Business Media, LLC. 2010

Authors and Affiliations

  1. 1.European Central BankFrankfurt am MainGermany

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