Co-authors: John Rogers, Sili Zhou
Affiliation: International School of Finance, Fudan University
Date and time: Wednesday, January 14, 2026 14:30 (Santiago, GMT-03:00)
Location (Hybrid Seminar):

• Sala Constitución at the Central Bank of Chile, Morandé 115, second floor
• Online meeting

Registration: seminarios@bcentral.cl

Abstract: Liberalization improves allocative efficiency but generates volatility. In the short run, foreign capital flows lower funding costs and enhance market efficiency. Domestic investment decisions change through both a funding cost channel and a learning channel. In the long run, foreign capital flows make domestic firms more sensitive to global shocks. The “China Connect”, a carefully designed partial equity market liberalization in a capital-abundant country, provides a quasi-natural policy experiment to investigate the capital inflow effects of liberalization using firm-level data. Identification is further improved by the unique Chinese environment including the trapped savings problem, significant domestic capital misallocation, and overall tight capital controls.