Introduction

The growth of capital flows changes not only the volumes and the frequencies of flows but also their nature and the composition, which could then affect the fundamentals of an economy and have raised many concerns. Thus, the issues related to capital flows have attracted broad attention and discussion, especially in emerging markets. Moreover, some of the datasets provide only annual data, and some datasets provide only net flows. These datasets not only fail to differentiate the types of flows but also neglect the possibility of seasonal effects and have mixed the changes of flows to/from various industries. In the 1970s, banking systems were deregulated jointly with financial liberalization as well as the liberalization of capital accounts/controls. To limit the exposure to global risks without restoring bank regulations, capital controls have been popularly adopted as macro-prudential policies. The chapter also presents an overview of the key concepts discussed in this book.