Abstract: This paper econometrically analyzes the effects of policy and financial uncertainty on abnormalcross-border capital flows with the panel probit model, further exploring the drivers of abnormalcross-border capital flows and their heterogeneity across economies. Results reveal that theoccurrence of abnormal cross-border capital flows is clustered during periods of high uncertainty.Rising financial uncertainty significantly increases the probability of capital stops and retrenchments, whereas policy uncertainty does not have a positive impact on them. Abnormalcross-border capital flows in developed economies are more evenly driven by uncertainty, international and domestic factors than those in emerging economies, which are mainly affected by uncertainty.

Keywords: Financial uncertainty;Economic policy uncertainty;Abnormal cross-border capital flows;Emerging economies;Developed economies