The external balance sheets of many emerging market countries are distinguished by their holdings of assets primarily in the form of foreign debt and foreign exchange reserves, while their liabilities are predominantly equity, either foreign direct investment or portfolio equity. We investigate...

We evaluate whether financial openness leaves emerging market economies vulnerable to the adverse effects of capital reversals (sudden stops) on domestic investment. We investigate this claim in a broad sample of emerging markets during the period 1976-2002. If the banking sector does not...