When are Capital Controls Effective? Evidence from Malaysia and Thailand

Juthathip Jongwanich, Maria Socorro Gochoco-Bautista, Jong Wha Lee

Research output: Contribution to journalArticlepeer-review

5 Citations (Scopus)


This study examines the impact of capital controls using monthly information to construct higher-frequency, quarterly indexes for Malaysia and Thailand over the period 2000-2010 in a Vector Auto-Regression (VAR) model. The results show that effectiveness of a capital control policy is not identical between Malaysia and Thailand. This could result from country-specific factors, the form of capital controls as well as degree of efficacy, which vary greatly between these two countries. Restrictions in Thailand have no significant effect on inflows but are especially effective for outflows, particularly foreign direct investment. In Malaysia, capital relaxation tends to have a significant impact on inward foreign direct investment and portfolio inflows. However, the results show that changes in capital account policies do not have a significant impact on the real exchange rate in both Malaysia and Thailand.

Original languageEnglish
Pages (from-to)619-651
Number of pages33
JournalInternational Economic Journal
Issue number4
Publication statusPublished - 2011 Dec


  • Asia
  • Capital flows
  • F21
  • F32
  • F36
  • F41
  • G15
  • capital controls
  • financial integration

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)


Dive into the research topics of 'When are Capital Controls Effective? Evidence from Malaysia and Thailand'. Together they form a unique fingerprint.

Cite this