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...

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...