Mutual Fund Investment in Emerging Markets: An Overview

  • Graciela Kaminsky
  • Richard Lyons
  • Sergio Schmukler


The crises initiated in Mexico in 1994, Thailand in 1997, and Russia in 1998 had strong spillover effects in their regions and around the world. As speculative attacks brought down long-standing pegs, the attacked countries were driven into some of the deepest recessions in modem times. Even countries that successfully defended their currencies were scarred by deep recessions due to the tight monetary conditions implemented to fight the attacks. These crises were not confined to national borders, nor were they confined to specific regions. The Thai crisis engulfed, within days, Indonesia, Malaysia, and the Philippines. The Russian crisis spread to countries as far apart as Brazil and Pakistan. Even developed countries were affected, with the Russian default and devaluation reverberating through financial markets in Germany, Great Britain, and the United States.


Foreign Direct Investment Mutual Fund Institutional Investor Pension Fund Hedge Fund 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Bank for International Settlements (1998). 68th Annual Report, Basle, Switzerland.Google Scholar
  2. Borensztein, Eduardo and R. Gaston Gelos (1999). “A Panic-Prone Pack? The Behavior of Emerging Market Mutual Funds.” International Monetary Fund mimeo.Google Scholar
  3. Bowe, Michal and Daniel Domuta (1999). “Foreign Investor Behaviour and the Asian Financial Crisis.” University of Manchester mimeo.Google Scholar
  4. Brown, Stephen, William Goetzmann, and James Park (1998) “Hedge Funds and the Asian Currency Crisis of 1997.” NBER Working Paper 6427.Google Scholar
  5. Calvo, Guillermo (1998). “Capital Market Contagion and Recession: An Explanation of the Russian Virus.” University of Maryland mimeo.Google Scholar
  6. Calvo, Guillermo, and Enrique Mendoza (2000). “Rational Herd Behavior and the Globalization of Securities Markets.” Journal of International Economics, 51 (1): 79–113.CrossRefGoogle Scholar
  7. Eichengreen, Barry, and Donald Mathieson (1998). “Hedge Funds and Financial Market Dynamics.” International Monetary Fund Occasional Paper No. 166.Google Scholar
  8. Frankel, Jeffrey and Sergio Schmukler (1996). “Country Fund Discounts and the Mexican Crisis of December 1994: Did Local Residents Turn Pessimistic Before International Investors?” Open Economies Review, 7: 511–534.CrossRefGoogle Scholar
  9. Frankel, Jeffrey, and Sergio Schmukler (1998). “Crisis, Contagion, and Country Funds,” in Reuven Glick, ed., Managing Capital Flows and Exchange Rates. ( Cambridge, New York, and Melbourne: Cambridge University Press. )Google Scholar
  10. Frankel, Jeffrey, and Sergio Schmukler (2000). “Country Funds and Asymmetric Information.” International Journal of Finance and Economics, 5: 177–195.CrossRefGoogle Scholar
  11. Froot, Kenneth, Paul O’Connell, and Mark Seasholes (2000). “The Portfolio Flows of International Investors, I.” Forthcoming Journal of Financial Economics.Google Scholar
  12. Kaminsky, Graciela, Richard Lyons, and Sergio Schmukler (2000a). “Managers, Investors, and Crises: Mutual Fund Strategies in Emerging Markets.” World Bank Working Paper No. 2399 and NBER Working Paper No. 7855.Google Scholar
  13. Kaminsky, Graciela, Richard Lyons, and Sergio Schmukler (2000b). “Liquidity, Fragility, and Risk: The Behavior of Mutual Funds during Crises.” Mimeo.Google Scholar
  14. Kodres, Laura, and Matthew Pritsker (1999). “A Rational Expectations Model of Financial Contagion,” International Monetary Fund mimeo.Google Scholar
  15. Levy Yeyati, Eduardo and Angel Ubide (1998). “Crises, Contagion, and the Closed-End Country Fund Puzzle.” IMF Working Paper No. 98 /143Google Scholar
  16. Marcis, R., S. West, and V. Leonard-Chambers (1995). “Mutual Fund Shareholder Response to Market Disruptions.” Perspective, Investment Company Institute, 1(1).Google Scholar
  17. Pan, Ming-Shiun, Kam Cham, and David Wright (2000). “Divergent Expectations and the Asian Financial Crisis of 1997.” Forthcoming Journal of Financial Research.Google Scholar
  18. Rea, James (1996). “U.S. Emerging Market Funds: Hot Money or Stable Source of Investment Capital?” Perspective, Investment Company Institute, 2(6).Google Scholar
  19. Van Rijckeghem, Caroline and Beatrice Weder (2000). “Financial Contagion: Spillovers through Banking Centers.” International Monetary Fund mimeo.Google Scholar
  20. World Bank (1997). Private Capital Flows to Developing Countries, World Bank Policy Research Report.Google Scholar

Copyright information

© Springer Science+Business Media New York 2001

Authors and Affiliations

  • Graciela Kaminsky
    • 1
  • Richard Lyons
    • 2
  • Sergio Schmukler
    • 3
  1. 1.George Washington UniversityUSA
  2. 2.University of CaliforniaBerkeleyUSA
  3. 3.The World BankUSA

Personalised recommendations