01782cas a2200253 a 4500 AALejournalIMF005949 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451873115 1018-5941 BD-DhAAL BD-DhAAL Tong, Hui. The Composition Matters : Capital Inflows and Liquidity Crunch During a Global Economic Crisis / Hui Tong, Shang-Jin Wei. Washington, D.C. : International Monetary Fund, 2009. 1 online resource (37 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students We study whether capital flows affect the degree of credit crunch faced by a country's manufacturing firms during the 2007-09 crisis. Examining 3823 firms in 24 emerging countries, we find that the decline in stock prices was more severe for firms that are intrinsically more dependent on external finance for working capital. The volume of capital flows has no significant effect on the severity of the credit crunch. However, the composition of capital flows matters: pre-crisis exposure to non-FDI capital inflows worsens the credit crunch, while exposure to FDI alleviates the liquidity constraint. Similar results also hold surrounding the Lehman Brothers bankruptcy. Mode of access: Internet Wei, Shang-Jin. IMF Working Papers; Working Paper ; No. 2009/164 Full text available on IMF http://elibrary.imf.org/view/journals/001/2009/164/001.2009.issue-164-en.xml IMF e-Library