A bloated and dysfunctional financial system had misallocated capital and, rather than managing risk, had actually created it.

State controlled banks allocate capital.

But this vigorous attempt to reduce interest rates is distorting capital allocation.

Before World War II, venture capital investments (originally known as development capital ) were primarily the domain of wealthy individuals and families.

Capital controls, whatever their benefits in terms of mitigating the risks associated with volatile capital flows, are costly in a variety of ways.

The single market principle was supposed to promote the efficient allocation of capital and labor.

As a result, financial markets, which are supposed to manage risk and allocate capital efficiently, created risk and misallocated wildly.

But Chinese policymakers should also recognize the significant risks inherent in relaxing capital controls.

More importantly, the crisis highlighted the risks associated with high dependence on foreign capital.

Initial capital

The latter course risks the worst of all worlds all of the costs of capital controls and all of the domestic policy complications from volatile capital flows, but few of the potential benefits of foreign capital.

The Art of Capital Flight

Damming Capital

The Capital Flow Conundrum

Capital flows and remittances

E. Financial capital and resilience

National Capital

Capital purchase items.

liabilities plus equity.

Who is HlG Capital?

The height kind of represents the quantity.

Er... Thee capitalization will be shared equally.

Borrowing in domestic currency avoids the risks associated with currency mismatches and pro cyclical foreign capital flows.

As above, firm value is enhanced when, and if, the return on capital exceeds the cost of capital.

Since high risk premiums on government bonds endanger the capital adequacy of banks, half a solution is not enough.

The portion of capital inflows that is not re exported represents net capital inflows.

So what is going to happen is the guy with the capital is just going to end up with more capital.

The Siren Song of Capital Controls

Investment and private flows

(o) Working Capital Fund

I. ROLE OF FOREIGN CAPITAL

II. ROLE OF FOREIGN CAPITAL . 2 4 2

Net movement of capital e

(b) Working capital funds

So we're going to have to raise some money.

What I need is more stock.

As a result, market oriented interest rate reform is now needed to help optimize capital allocation and support the development of China s financial market, thereby laying the groundwork for future capital account and exchange rate liberalization.

While the right policies cannot eliminate risk, they can ameliorate the cost benefit tradeoff from capital flows.

The resulting perception that currency risk was declining bolstered capital inflows further.

Patient capital requires that we have incredible tolerance for risk, a long time horizon in terms of allowing those entrepreneurs time to experiment, to use the market as the best listening device that we have, and the expectation of below market returns, but outsized social impact.

However, barring any major economic bumps, the changes will have a positive impact, as capital allocation becomes more efficient.

Most economists in China seem to support the PBOC s stance, citing the potential benefits of capital account liberalization. But Chinese policymakers should also recognize the significant risks inherent in relaxing capital controls.

Brazil has been aggressive in terms of capital restrictions, twice increasing its tax on financial inflows.

Working capital. Working capital stood at 46.5 million as at 31 December 2004.

Jacqueline Novogratz on patient capitalism