Given the zero interest rate bound, and given also that there are many economic entities exposed to balance sheet adjustments, it may be more difficult than in other circumstances for monetary easing policy to take effect through domestic economic entities. Rather, it tends to take effect through external channels, such as capital outflows and currency depreciation.
The reality for those emerging economies receiving capital inflows is that, although the growth of their financial and capital markets may indeed have been remarkable in recent years, their markets are still small and less liquid compared with those of advanced economies.