The emergence of large and liquid private capital flows to developing countries contributed to a rash of financial crises during the 1990s.

Question

Quizplus · Accepted Answer

This statement is true. The large and liquid private capital flows to developing countries, often referred to as "hot money," were a contributing factor to financial crises in several developing countries during the 1990s, including Mexico, Asian countries, and Russia. These flows were often volatile and vulnerable to sudden reversals, leading to currency devaluations, bank collapses, and economic downturns.

The Emergence of Large and Liquid Private Capital Flows to Developing