An argument can be made for controls on the inflow of capital for developing countries because capital inflows can lead to a lending boom, speculation, and excessive risk taking.

Question

Quizplus · Accepted Answer

Capital inflows can lead to instability in developing countries and can increase the risk of financial crises. Controls on capital inflows can help prevent excessive speculation, lending booms, and risky behavior by investors.

An Argument Can Be Made for Controls on the Inflow