Portfolio Inflows Eclipsing Banking Inflows : Alternative Facts?

Superficial examination of aggregate gross cross-border capital inflow data suggests that therewas no substitution between portfolio inflows and bank loans in recent years. However, ournovel analysis of disaggregate inflows (both by types of instrument and borrower) showsinteresting heterogeneity. There has been substitution of bank loans for portfolio debt securitiesnot only in the case of corporate and sovereign borrowers in advanced countries, but alsosovereign borrowers in emerging countries. In the case of corporate borrowers in emergingmarkets, the relationship corresponds to complementarity across types of gross capital inflows,especially during periods of positive capital gross inflows after the global financial crisis. Alarge part of these patterns does not seem to be driven by a common phenomenon acrosscountries associated with the global financial cycle, but rather by country-specific factors