Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/260522 
Year of Publication: 
2022
Citation: 
[Journal:] RBI Bulletin [ISSN:] 0034-5512 [Volume:] 76 [Issue:] 6 [Publisher:] Reserve Bank of India [Place:] Mumbai [Year:] 2022 [Pages:] 73-88
Publisher: 
Reserve Bank of India, Mumbai
Abstract: 
With the spate of emerging market crises since the 1990s and the experience with the global financial crisis and its aftermath, attention has turned from the benefits associated with capital flows to their consequences such as accentuating financial vulnerabilities, aggravating macroeconomic instability and spreading contagion. For India, portfolio flows are the most sensitive to shifts in risk sentiment globally and spillovers. Applying a capital flows at risk approach, it is observed that in an adverse scenario, potential portfolio outflows can average up to 3.2 per cent of GDP. In a black swan event comprising a combination of shocks, potential portfolio outflows can rise to 7.7 per cent of GDP, highlighting the need for maintaining liquid reserves to quell such potential bouts of instability.
Subjects: 
Capital flows
global risk aversion
capital flows at risk
JEL: 
B27
F32
F34
Document Type: 
Article
Document Version: 
Published Version
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